G.R. No. 143855 September 21, 2010 Category D US$250,000.00 per store of May be wholly owned by foreigners.

foreign enterprises
REPRESENTATIVES GERARDO S. ESPINA, ORLANDO FUA, JR., PROSPERO AMATONG, specializing in high-end or
ROBERT ACE S. BARBERS, RAUL M. GONZALES, PROSPERO PICHAY, JUAN MIGUEL luxury products
ZUBIRI and FRANKLIN BAUTISTA, Petitioners,
R.A. 8762 also allows natural-born Filipino citizens, who had lost their citizenship and now
vs.
reside in the Philippines, to engage in the retail trade business with the same rights as Filipino
HON. RONALDO ZAMORA, JR. (Executive Secretary), HON. MAR ROXAS (Secretary
citizens.
of Trade and Industry), HON. FELIPE MEDALLA (Secretary of National Economic and
Development Authority), GOV. RAFAEL BUENAVENTURA (Bangko Sentral ng
Pilipinas) and HON. LILIA BAUTISTA (Chairman, Securities and Exchange On October 11, 2000 petitioners ***Magtanggol T. Gunigundo I, Michael T. Defensor, Gerardo
Commission), Respondents. S. Espina, Benjamin S. Lim, Orlando Fua, Jr., Prospero Amatong, Sergio Apostol, Robert Ace
S. Barbers, Enrique Garcia, Jr., Raul M. Gonzales, Jaime Jacob, Apolinario Lozada, Jr.,
Leonardo Montemayor, Ma. Elena Palma-Gil, Prospero Pichay, Juan Miguel Zubiri and Franklin
DECISION
Bautista, all members of the House of Representatives, filed the present petition, assailing
the constitutionality of R.A. 8762 on the following grounds:
ABAD, J.:
First, the law runs afoul of Sections 9, 19, and 20 of Article II of the Constitution which
This case calls upon the Court to exercise its power of judicial review and determine the enjoins the State to place the national economy under the control of Filipinos to achieve
constitutionality of the Retail Trade Liberalization Act of 2000, which has been assailed as in equal distribution of opportunities, promote industrialization and full employment, and
breach of the constitutional mandate for the development of a self-reliant and independent protect Filipino enterprise against unfair competition and trade policies.
national economy effectively controlled by Filipinos.
Second, the implementation of R.A. 8762 would lead to alien control of the retail trade,
The Facts and the Case which taken together with alien dominance of other areas of business, would result in
the loss of effective Filipino control of the economy.
On March 7, 2000 President Joseph E. Estrada signed into law Republic Act (R.A.) 8762, also
known as the Retail Trade Liberalization Act of 2000. It expressly repealed R.A. 1180, which Third, foreign retailers like Walmart and K-Mart would crush Filipino retailers and sari-
absolutely prohibited foreign nationals from engaging in the retail trade business. R.A. 8762 sari store vendors, destroy self-employment, and bring about more unemployment.
now allows them to do so under four categories:
Fourth, the World Bank-International Monetary Fund had improperly imposed the
Category A Less than Exclusively for Filipino citizens and passage of R.A. 8762 on the government as a condition for the release of certain loans.
US$2,500,000.00 corporations wholly owned by Filipino
citizens. Fifth, there is a clear and present danger that the law would promote monopolies or
combinations in restraint of trade.
Category B US$2,500,000.00 up but less For the first two years of R.A. 8762’s
than US$7,500,000.00 effectivity, foreign ownership is allowed up
to 60%. After the two-year period, 100% Respondents Executive Secretary Ronaldo Zamora, Jr., Trade and Industry Secretary Mar
foreign equity shall be allowed. Roxas, National Economic and Development Authority (NEDA) Secretary Felipe Medalla,
Bangko Sentral ng Pilipinas Gov. Rafael Buenaventura, and Securities and Exchange
Category C US$7,500,000.00 or more May be wholly owned by foreigners. Commission Chairman Lilia Bautista countered that:
Foreign investments for establishing a
store in Categories B and C shall not be First, petitioners have no legal standing to file the petition. They cannot invoke the
less than the equivalent in Philippine Pesos fact that they are taxpayers since R.A. 8762 does not involve the disbursement of
of US$830,000.00. public funds. Nor can they invoke the fact that they are members of Congress since
they made no claim that the law infringes on their right as legislators.

1
 Second, the petition does not involve any justiciable controversy. Petitioners of course
claim that, as members of Congress, they represent the small retail vendors in their
respective districts but the petition does not allege that the subject law violates the
rights of those vendors.
Third, petitioners have failed to overcome the presumption of constitutionality of R.A.
8762. Indeed, they could not specify how the new law violates the constitutional
provisions they cite. Sections 9, 19, and 20 of Article II of the Constitution are not
self-executing provisions that are judicially demandable.
Fourth, the Constitution mandates the regulation but not the prohibition of foreign
investments. It directs Congress to reserve to Filipino citizens certain areas of
investments upon the recommendation of the NEDA and when the national interest so
dictates. But the Constitution leaves to the discretion of the Congress whether or not
to make such reservation. It does not prohibit Congress from enacting laws allowing
the entry of foreigners into certain industries not reserved by the Constitution to
Filipino citizens.
The Issues Presented
Simplified, the case presents two issues:
1. Whether or not petitioner lawmakers have the legal standing to challenge the
constitutionality of R.A. 8762; and
2. Whether or not R.A. 8762 is unconstitutional.
The Court’s Ruling
One. The long settled rule is that he who challenges the validity of a law must have a standing
to do so.1 Legal standing or locus standi refers to the right of a party to come to a court of
justice and make such a challenge. More particularly, standing refers to his personal and
substantial interest in that he has suffered or will suffer direct injury as a result of the passage
of that law.2 To put it another way, he must show that he has been or is about to be denied
some right or privilege to which he is lawfully entitled or that he is about to be subjected to
some burdens or penalties by reason of the law he complains of. 3
Here, there is no clear showing that the implementation of the Retail Trade Liberalization Act
prejudices petitioners or inflicts damages on them, either as taxpayers 4 or as legislators.5 Still
the Court will resolve the question they raise since the rule on standing can be relaxed for
nontraditional plaintiffs like ordinary citizens, taxpayers, and legislators when as in this case
the public interest so requires or the matter is of transcendental importance, of overarching
significance to society, or of paramount public interest.6
Two. Petitioners mainly argue that R.A. 8762 violates the mandate of the 1987 Constitution
for the State to develop a self-reliant and independent national economy effectively controlled
by Filipinos. They invoke the provisions of the Declaration of Principles and State Policies
under Article II of the 1987 Constitution, which read as follows:
Section 9. The State shall promote a just and dynamic social order that will ensure the
prosperity and independence of the nation and free the people from poverty through policies
that provide adequate social services, promote full employment, a rising standard of living,
and an improved quality of life for all.
xxxx
Section 19. The State shall develop a self-reliant and independent national economy
effectively controlled by Filipinos.
Section 20. The State recognizes the indispensable role of the private sector, encourages
private enterprise, and provides incentives to needed investments.
Petitioners also invoke the provisions of the National Economy and Patrimony under Article
XII of the 1987 Constitution, which reads:
Section 10. The Congress shall, upon recommendation of the economic and planning agency,
when the national interest dictates, reserve to citizens of the Philippines or to corporations or
associations at least sixty per centum of whose capital is owned by such citizens, or such
higher percentage as Congress may prescribe, certain areas of investments. The Congress
shall enact measures that will encourage the formation and operation of enterprises whose
capital is wholly owned by Filipinos.
In the grant of rights, privileges, and concessions covering the national economy and
patrimony, the State shall give preference to qualified Filipinos.
The State shall regulate and exercise authority over foreign investments within its national
jurisdiction and in accordance with its national goals and priorities.
xxxx
Section 12. The State shall promote the preferential use of Filipino labor, domestic materials
and locally produced goods, and adopt measures that help make them competitive.
Section 13. The State shall pursue a trade policy that serves the general welfare and utilizes
all forms and arrangements of exchange on the basis of equality and reciprocity.
2
But, as the Court explained in Tañada v. Angara,7 the provisions of Article II of the 1987
Constitution, the declarations of principles and state policies, are not self-executing.
Legislative failure to pursue such policies cannot give rise to a cause of action in the courts.
The Court further explained in Tañada that Article XII of the 1987 Constitution lays down the
ideals of economic nationalism: (1) by expressing preference in favor of qualified Filipinos in
the grant of rights, privileges and concessions covering the national economy and patrimony
and in the use of Filipino labor, domestic materials and locally-produced goods; (2) by
mandating the State to adopt measures that help make them competitive; and (3) by
requiring the State to develop a self-reliant and independent national economy effectively
controlled by Filipinos.8ten.lihpwal
In other words, while Section 19, Article II of the 1987 Constitution requires the development
of a self-reliant and independent national economy effectively controlled by Filipino
entrepreneurs, it does not impose a policy of Filipino monopoly of the economic environment.
The objective is simply to prohibit foreign powers or interests from maneuvering our economic
policies and ensure that Filipinos are given preference in all areas of development.
Indeed, the 1987 Constitution takes into account the realities of the outside world as it
requires the pursuit of a trade policy that serves the general welfare and utilizes all forms and
arrangements of exchange on the basis of equality and reciprocity; and speaks of industries
which are competitive in both domestic and foreign markets as well as of the protection of
Filipino enterprises against unfair foreign competition and trade practices. Thus, while the
Constitution mandates a bias in favor of Filipino goods, services, labor and enterprises, it also
recognizes the need for business exchange with the rest of the world on the bases of equality
and reciprocity and limits protection of Filipino enterprises only against foreign competition
and trade practices that are unfair.9
In other words, the 1987 Constitution does not rule out the entry of foreign investments,
goods, and services. While it does not encourage their unlimited entry into the country, it
does not prohibit them either. In fact, it allows an exchange on the basis of equality and
reciprocity, frowning only on foreign competition that is unfair.10 The key, as in all economies
in the world, is to strike a balance between protecting local businesses and allowing the entry
of foreign investments and services.1avvphi1
More importantly, Section 10, Article XII of the 1987 Constitution gives Congress the
discretion to reserve to Filipinos certain areas of investments upon the recommendation of
the NEDA and when the national interest requires. Thus, Congress can determine what policy
to pass and when to pass it depending on the economic exigencies. It can enact laws allowing
the entry of foreigners into certain industries not reserved by the Constitution to Filipino
citizens. In this case, Congress has decided to open certain areas of the retail trade business
to foreign investments instead of reserving them exclusively to Filipino citizens. The NEDA
has not opposed such policy.
The control and regulation of trade in the interest of the public welfare is of course an exercise
of the police power of the State. A person’s right to property, whether he is a Filipino citizen
or foreign national, cannot be taken from him without due process of law. In 1954, Congress
enacted the Retail Trade Nationalization Act or R.A. 1180 that restricts the retail business to
Filipino citizens. In denying the petition assailing the validity of such Act for violation of the
foreigner’s right to substantive due process of law, the Supreme Court held that the law
constituted a valid exercise of police power.11 The State had an interest in preventing alien
control of the retail trade and R.A. 1180 was reasonably related to that purpose. That law is
not arbitrary.
Here, to the extent that R.A. 8762, the Retail Trade Liberalization Act, lessens the restraint
on the foreigners’ right to property or to engage in an ordinarily lawful business, it cannot be
said that the law amounts to a denial of the Filipinos’ right to property and to due process of
law. Filipinos continue to have the right to engage in the kinds of retail business to which the
law in question has permitted the entry of foreign investors.
Certainly, it is not within the province of the Court to inquire into the wisdom of R.A. 8762
save when it blatantly violates the Constitution. But as the Court has said, there is no showing
that the law has contravened any constitutional mandate. The Court is not convinced that the
implementation of R.A. 8762 would eventually lead to alien control of the retail trade business.
Petitioners have not mustered any concrete and strong argument to support its thesis. The
law itself has provided strict safeguards on foreign participation in that business. Thus –
First, aliens can only engage in retail trade business subject to the categories above-
enumerated; Second, only nationals from, or juridical entities formed or incorporated in
countries which allow the entry of Filipino retailers shall be allowed to engage in retail trade
business; and Third, qualified foreign retailers shall not be allowed to engage in certain
retailing activities outside their accredited stores through the use of mobile or rolling stores
or carts, the use of sales representatives, door-to-door selling, restaurants and sari-sari stores
and such other similar retailing activities.
In sum, petitioners have not shown how the retail trade liberalization has prejudiced and can
prejudice the local small and medium enterprises since its implementation about a decade
ago.
WHEREFORE, the Court DISMISSES the petition for lack of merit. No costs.
SO ORDERED.
G.R. No. 188747 January 29, 2014
MANILA WATER COMPANY, Petitioner,vs.
CARLITO DEL ROSARIO, Respondent.
3
DECISION
PEREZ, J.:
This is a Petition for Review on Certiorari1 filed pursuant to Rule 45 of the Revised Rules of
Court, assailing the 31 March 2009 Decision2 rendered by the Fifth Division of the Court of
Appeals in CA-G.R. SP No. 925 83. In its assailed decision, the appellate court: ( 1) reversed
as grave abuse of discretion the Resolution of the National Labor Relations Commission
(NLRC) which dismissed the petition of Manila Water Company (Manila Water) on technical
grounds; and (2) proceeded to affirm with modification the ruling of the Labor Arbiter. Manila
Water was ordered to pay respondent Carlito Del Rosario (Del Rosario) separation pay to be
computed from 1 August 1997 up to June 2000.
In a Resolution3 dated 7 July 2009, the appellate court refused to reconsider its earlier
decision.
The Facts
On 22 October 1979, Del Rosario was employed as Instrument Technician by Metropolitan
Waterworks and Sewerage System (MWSS). Sometime in 1996, MWSS was reorganized
pursuant to Republic Act No. 8041 or the National Water Crisis Act of 1995, and its
implementing guidelines − Executive Order No. 286. Because of the reorganization, Manila
Water absorbed some employees of MWSS including Del Rosario. On 1 August 1997, Del
Rosario officially became an employee of Manila Water.
Sometime in May 2000, Manila Water discovered that 24 water meters were missing in its
stockroom. Upon initial investigation, it appeared that Del Rosario and his co-employee, a
certain Danilo Manguera, were involved in the pilferage and the sale of water meters to the
company’s contractor. Consequently, Manila Water issued a Memorandum dated 23 June
2000, directing Del Rosario to explain in writing within 72 hours why he should not be dealt
with administratively for the loss of the said water meters.4 In his letter-explanation,5 Del
Rosario confessed his involvement in the act charged and pleaded for forgiveness, promising
not to commit similar acts in the future.
On 29 June 2000, Manila Water conducted a hearing to afford Del Rosario the opportunity to
personally defend himself and to explain and clarify his defenses to the charge against him.
During the formal investigation Del Rosario was found responsible for the loss of the water
meters and therefore liable for violating Section 11.1 of the Company’s Code of Conduct.6
Manila Water proceeded to dismiss Del Rosario from employment on 3 July 2000.7
This prompted Del Rosario to file an action for illegal dismissal claiming that his severance
from employment is without just cause. In his Position Paper submitted before the labor
officer, Del Rosario averred that his admission to the misconduct charged was not voluntary
but was coerced by the company. Such admission therefore, made without the assistance of
a counsel, could not be made basis in terminating his employment.
Refuting the allegations of Del Rosario, Manila Water pointed out that he was indeed involved
in the taking of the water meters from the company’s stock room and of selling these to a
private contractor for personal gain. Invoking Section 11.1 of the Company’s Code of Conduct,
Manila Water averred that such act of stealing the company’s property is punishable by
dismissal. The company invited the attention of this Court to the fact that Del Rosario himself
confessed his involvement to the loss of the water meters not only in his letter-explanation,
but also during the formal investigation, and in both instances, pleaded for his employer’s
forgiveness.8
After weighing the positions taken by the opposing parties, including the evidence adduced in
support of their respective cases, the Labor Arbiter issued a Decision9 dated 30 May 2002
dismissing for lack of merit the complaint filed by Del Rosario who was, however, awarded
separation pay. According to the Labor Arbiter, Del Rosario’s length of service for 21 years,
without previous derogatory record, warrants the award of separation pay. The decretal
portion of the decision reads:
WHEREFORE, viewed from the foregoing, judgment is hereby rendered DISMISSING the
complaint for illegal dismissal for lack of merit.
[Manila Water] is hereby ordered to pay complainant separation pay equivalent to one-half
(1/2) month’s salary for every year of service based on his basic salary (Php 11,244.00) at
the time of his dismissal. This shall be computed from [1 August 1997] up to June 2000, the
total amount of which is ONE HUNDRED EIGHTEEN THOUSAND SIXTY-TWO (Php 118,062.00)
PESOS.10
In a Resolution11 dated 30 September 2003, the NLRC dismissed the appeal interposed by
Manila Water for its failure to append a certification against forum shopping in its
Memorandum of Appeal.
Similarly ill-fated was Manila Water’s Motion for Reconsideration which was denied by the
NLRC in a Resolution12 dated 28 April 2005.
On Certiorari, the Court of Appeals in its Decision dated 31 March 2009, reversed the NLRC
Resolution and held that it committed a grave abuse of discretion when it dismissed Manila
Water’s appeal on mere technicality. The appellate court, however, proceeded to affirm the
decision of the Labor Arbiter awarding separation pay to Del Rosario. Considering that Del
Rosario rendered 21 years of service to the company without previous derogatory record, the
appellate court considered the granting of separation pay by the labor officer justified. The
fallo of the assailed Court of Appeals Decision reads:
4
WHEREFORE, the petition is partly granted. The assailed Resolutions dated September 30,
2003 and [April 28, 2005] of public respondent NLRC are set aside. The Decision dated May
30, 2002 of the [L]abor [A]rbiter is reinstated, subject to the modification that the
computation of the award of separation pay [to] private respondent shall be counted from
August 1, 1997 x x x up to June 2000.13
In a Resolution14 dated 7 July 2009, the Court of Appeals refused to reconsider its earlier
decision.
Unrelenting, Manila Water filed the instant Petition for Review on Certiorari assailing the
foregoing Court of Appeals Decision and Resolution on the sole ground that:
THE [COURT OF APPEALS] SERIOUSLY ERRED IN ISSUING THE QUESTIONED DECISION AND
RESOLUTION WHICH DIRECTLY CONTRAVENE BOOK VI, RULE 1, AND SECTION 7 OF THE
OMNIBUS RULES IMPLEMENTING THE LABOR CODE AND PREVAILING JURISPRUDENCE
WHICH CATEGORICALLY PROVIDE THAT AN EMPLOYEE SEPARATED FROM SERIOUS
MISCONDUCT IS NOT ENTITLED TO TERMINATION (SEPARATION) PAY.15
The Court’s Ruling
In the instant petition, Manila Water essentially questions the award of separation pay to
respondent who was dismissed for stealing the company’s property which amounted to gross
misconduct. It argues that separation pay or financial assistance is not awarded to employees
guilty of gross misconduct or for cause reflecting on his moral character.16
Del Rosario for his part maintains that there is no legal ground to justify his termination from
employment. He insists that his admission pertaining to his involvement in the loss of the
water meters was merely coerced by the company. Since his dismissal was without valid or
just cause, Del Rosario avers that Manila Water is guilty of illegal dismissal rendering it liable
for the payment of backwages and separation pay.17
It must be stressed at the outset that the correctness of the Labor Arbiter’s pronouncement
on the legality of Del Rosario’s dismissal is no longer an issue and is beyond modification.
While Manila Water timely appealed the ruling of the Labor Arbiter awarding separation pay
to Del Rosario, the latter did not question the dismissal of his illegal termination case.18 It is
settled in our jurisprudence that a party who has not appealed cannot obtain from the
appellate court any affirmative relief other than the ones granted in the appealed decision.19
Due process prevents the grant of additional awards to parties who did not appeal.20 Having
said that, this Court will no longer dwell on the issue of whether or not Del Rosario was illegally
dismissed from employment. Included in the closed aspect of the case is respondent’s
argument that the absence of his counsel when he admitted the charge against him
diminished the evidentiary value of such admission. Nonetheless, it may be mentioned that
the constitutional right to counsel is available only during custodial investigation. If the
investigation is merely administrative conducted by the employer and not a criminal
investigation, the admission made during such investigation may be used as evidence to
justify dismissal.21
Our focus will be on the propriety of the award for separation pay.
As a general rule, an employee who has been dismissed for any of the just causes enumerated
under Article 28222 of the Labor Code is not entitled to a separation pay.23 Section 7, Rule
I, Book VI of the Omnibus Rules implementing the Labor Code provides:
Sec. 7. Termination of employment by employer. — The just causes for terminating the
services of an employee shall be those provided in Article 282 of the Code. The separation
from work of an employee for a just cause does not entitle him to the termination pay provided
in the Code, without prejudice, however, to whatever rights, benefits and privileges he may
have under the applicable individual or collective agreement with the employer or voluntary
employer policy or practice.
In exceptional cases, however, the Court has granted separation pay to a legally dismissed
employee as an act of "social justice" or on "equitable grounds."24 In both instances, it is
required that the dismissal (1) was not for serious misconduct; and (2) did not reflect on the
moral character of the employee.25
In the leading case of Philippine Long Distance Telephone Company v. NLRC,26 we laid down
the rule that separation pay shall be allowed as a measure of social justice only in the
instances where the employee is validly dismissed for causes other than serious misconduct
reflecting his moral character. We clarified that:
We hold that henceforth separation pay shall be allowed as a measure of social justice only
in those instances where the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character. Where the reason for the valid dismissal
is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit
sexual relations with a fellow worker, the employer may not be required to give the dismissed
employee separation pay, or financial assistance, or whatever other name it is called, on the
ground of social justice.
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather
than punishing the erring employee for his offense. And we do not agree that the punishment
is his dismissal only and that the separation pay has nothing to do with the wrong he has
committed. Of course it has. Indeed, if the employee who steals from the company is granted
separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar
offense in his next employment because he thinks he can expect a like leniency if he is again
found out. This kind of misplaced compassion is not going to do labor in general any good as
it will encourage the infiltration of its ranks by those who do not deserve the protection and
concern of the Constitution.
5
The policy of social justice is not intended to countenance wrongdoing simply because it is
committed by the underprivileged. At best[,] it may mitigate the penalty but it certainly will
not condone the offense. Compassion for the poor is an imperative of every humane society
but only when the recipient is not a rascal claiming an undeserved privilege. Social justice
cannot be permitted to be refuge of scoundrels any more than can equity be an impediment
to the punishment of the guilty. Those who invoke social justice may do so only if their hands
are clean and their motives blameless and not simply because they happen to be poor. This
great policy of our Constitution is not meant for the protection of those who have proved they
are not worthy of it, like the workers who have tainted the cause of labor with the blemishes
of their own character.27
In the subsequent case of Toyota Motor Phils. Corp. Workers Association (TMPCWA) v.
National Labor Relations Commission,28 we expanded the exclusions and elucidated that
separation pay shall be allowed as a measure of social justice only in instances where the
employee is validly dismissed for causes other than serious misconduct, willful disobedience,
gross and habitual neglect of duty, fraud or willful breach of trust, commission of a crime
against the employer or his family, or those reflecting on his moral character. In the same
case, we instructed the labor officials that they must be most judicious and circumspect in
awarding separation pay or financial assistance as the constitutional policy to provide full
protection to labor is not meant to be an instrument to oppress the employers.29 The
commitment of the court to the cause of the labor should not embarrass us from sustaining
the employers when they are right, as here. In fine, we should be more cautious in awarding
financial assistance to the undeserving and those who are unworthy of liberality of the law.30
Guided by the foregoing rules, we have carefully treaded the path of compassionate justice
in the subsequent cases so as not to slip and favor labor at the expense of management.
In Tirazona v. Phillippine EDS Techno-Service, Inc. (PET, Inc.),31 we denied the award of
separation pay to an employee who was dismissed from employment due to loss of trust and
confidence.
While [this] Court commiserates with the plight of Tirazona, who has recently manifested that
she has since been suffering from her poor health condition, the Court cannot grant her plea
for the award of financial benefits based solely on this unfortunate circumstance. For all its
conceded merit, equity is available only in the absence of law and not as its replacement.
Equity as an exceptional extenuating circumstance does not favor, nor may it be used to
reward, the indolent or the wrongdoer for that matter. This Court will not allow a party, in
guise of equity, to benefit from its own fault.32 (Emphasis supplied).
The attendant circumstances in the present case considered, we are constrained to deny Del
Rosario separation pay since the admitted cause of his dismissal amounts to serious
misconduct. He is not only responsible for the loss of the water meters in flagrant violation of
the company’s policy but his act is in utter disregard of his partnership with his employer in
the pursuit of mutual benefits.
In the recent case of Daabay v. Coca-Cola Bottlers,33 this Court reiterated our ruling in Toyota
and disallowed the payment of separation pay to an employee who was found guilty of stealing
the company’s property. We repeated that an award of separation pay in such an instance is
misplaced compassion for the undeserving who may find their way back and weaken the fiber
of labor.
That Del Rosario rendered 21 years of service to the company will not save the day for
him.1âwphi1 To this case, Central Pangasinan Electric Cooperative, Inc. v. National Labor
Relations Commission is on all fours, thus:
Although long years of service might generally be considered for the award of separation
benefits or some form of financial assistance to mitigate the effects of termination, this case
is not the appropriate instance for generosity under the Labor Code nor under our prior
decisions. The fact that private respondent served petitioner for more than twenty years with
no negative record prior to his dismissal, in our view of this case, does not call for such award
of benefits, since his violation reflects a regrettable lack of loyalty and worse, betrayal of the
company. If an employee's length of service is to be regarded as a justification for moderating
the penalty of dismissal, such gesture will actually become a prize for disloyalty, distorting
the meaning of social justice and undermining the efforts of labor to cleanse its ranks of
undesirables.34
(Emphasis supplied).
Indubitably, the appellate court erred in awarding separation pay to Del Rosario without taking
into consideration that the transgression he committed constitutes a serious offense. The
grant of separation pay to a dismissed employee is determined by the cause of the dismissal.
The years of service may determine how much separation pay may be awarded. It is,
however, not the reason why such pay should be granted at all
In sum, we hold that the award of separation pay or any other kind of financial assistance to
Del Rosario, under the nomenclature of compassionate justice, is not warranted in the instant
case. A contrary rule would have the effect of rewarding rather than punishing an erring
employee, disturbing the noble concept of social justice.
WHEREFORE, premises considered, the petition is GRANTED. The assailed Decision and
Resolution of the Court of Appeals are hereby REVERSED and SET ASIDE.
SO ORDERED.
G.R. No. 118978 May 23, 1997
PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, * petitioner,
vs.
6
NATIONAL LABOR RELATIONS COMMISSION and GRACE DE GUZMAN, respondents.
REGALADO, J.:
Seeking relief through the extraordinary writ of certiorari, petitioner Philippine Telegraph and
Telephone Company (hereafter, PT & T) invokes the alleged concealment of civil status and
defalcation of company funds as grounds to terminate the services of an employee. That
employee, herein private respondent Grace de Guzman, contrarily argues that what really
motivated PT & T to terminate her services was her having contracted marriage during her
employment, which is prohibited by petitioner in its company policies. She thus claims that
she was discriminated against in gross violation of law, such a proscription by an employer
being outlawed by Article 136 of the Labor Code.
Grace de Guzman was initially hired by petitioner as a reliever, specifically as a
"Supernumerary Project Worker," for a fixed period from November 21, 1990 until April 20,
1991 vice one C.F. Tenorio who went on maternity leave.1 Under the Reliever Agreement
which she signed with petitioner company, her employment was to be immediately terminated
upon expiration of the agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and
from July 19, 1991 to August 8, 1991, private respondent's services as reliever were again
engaged by petitioner, this time in replacement of one Erlinda F. Dizon who went on leave
during both periods.2 After August 8, 1991, and pursuant to their Reliever Agreement, her
services were terminated.
On September 2, 1991, private respondent was once more asked to join petitioner company
as a probationary employee, the probationary period to cover 150 days. In the job application
form that was furnished her to be filled up for the purpose, she indicated in the portion for
civil status therein that she was single although she had contracted marriage a few months
earlier, that is, on May 26, 1991.3
It now appears that private respondent had made the same representation in the two
successive reliever agreements which she signed on June 10, 1991 and July 8, 1991. When
petitioner supposedly learned about the same later, its branch supervisor in Baguio City, Delia
M. Oficial, sent to private respondent a memorandum dated January 15, 1992 requiring her
to explain the discrepancy. In that memorandum, she was reminded about the company's
policy of not accepting married women for employment.4
In her reply letter dated January 17, 1992, private respondent stated that she was not aware
of PT&T's policy regarding married women at the time, and that all along she had not
deliberately hidden her true civil status.5 Petitioner nonetheless remained unconvinced by her
explanations. Private respondent was dismissed from the company effective January 29,
1992,6 which she readily contested by initiating a complaint for illegal dismissal, coupled with
a claim for non-payment of cost of living allowances (COLA), before the Regional Arbitration
Branch of the National Labor Relations Commission in Baguio City.
At the preliminary conference conducted in connection therewith, private respondent
volunteered the information, and this was incorporated in the stipulation of facts between the
parties, that she had failed to remit the amount of P2,380.75 of her collections. She then
executed a promissory note for that amount in favor of petitioner7. All of these took place in
a formal proceeding and with the agreement of the parties and/or their counsel.
On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a decision declaring
that private respondent, who had already gained the status of a regular employee, was
illegally dismissed by petitioner. Her reinstatement, plus payment of the corresponding back
wages and COLA, was correspondingly ordered, the labor arbiter being of the firmly expressed
view that the ground relied upon by petitioner in dismissing private respondent was clearly
insufficient, and that it was apparent that she had been discriminated against on account of
her having contracted marriage in violation of company rules.
On appeal to the National Labor Relations Commission (NLRC), said public respondent upheld
the labor arbiter and, in its decision dated April 29, 1994, it ruled that private respondent had
indeed been the subject of an unjust and unlawful discrimination by her employer, PT & T.
However, the decision of the labor arbiter was modified with the qualification that Grace de
Guzman deserved to be suspended for three months in view of the dishonest nature of her
acts which should not be condoned. In all other respects, the NLRC affirmed the decision of
the labor arbiter, including the order for the reinstatement of private respondent in her
employment with PT & T.
The subsequent motion for reconsideration filed by petitioner was rebuffed by respondent
NLRC in its resolution of November 9, 1994, hence this special civil action assailing the
aforestated decisions of the labor arbiter and respondent NLRC, as well as the denial resolution
of the latter.
1. Decreed in the Bible itself is the universal norm that women should be regarded with love
and respect but, through the ages, men have responded to that injunction with indifference,
on the hubristic conceit that women constitute the inferior sex. Nowhere has that prejudice
against womankind been so pervasive as in the field of labor, especially on the matter of equal
employment opportunities and standards. In the Philippine setting, women have traditionally
been considered as falling within the vulnerable groups or types of workers who must be
safeguarded with preventive and remedial social legislation against discriminatory and
exploitative practices in hiring, training, benefits, promotion and retention.
The Constitution, cognizant of the disparity in rights between men and women in almost all
phases of social and political life, provides a gamut of protective provisions. To cite a few of
the primordial ones, Section 14, Article II8 on the Declaration of Principles and State Policies,
expressly recognizes the role of women in nation-building and commands the State to ensure,
at all times, the fundamental equality before the law of women and men. Corollary thereto,
Section 3 of Article XIII9 (the progenitor whereof dates back to both the 1935 and 1973
Constitution) pointedly requires the State to afford full protection to labor and to promote full
employment and equality of employment opportunities for all, including an assurance of
entitlement to tenurial security of all workers. Similarly, Section 14 of Article XIII 10 mandates
that the State shall protect working women through provisions for opportunities that would
enable them to reach their full potential.
7

2. Corrective labor and social laws on gender inequality have emerged with more frequency
in the years since the Labor Code was enacted on May 1, 1974 as Presidential Decree No.
442, largely due to our country's commitment as a signatory to the United Nations Convention
on the Elimination of All Forms of Discrimination Against Women (CEDAW). 11
Principal among these laws are Republic Act No. 6727 12 which explicitly prohibits
discrimination against women with respect to terms and conditions of employment,
promotion, and training opportunities; Republic Act No. 6955 13 which bans the "mail-order-
bride" practice for a fee and the export of female labor to countries that cannot guarantee
protection to the rights of women workers; Republic Act No. 7192 14 also known as the
"Women in Development and Nation Building Act," which affords women equal opportunities
with men to act and to enter into contracts, and for appointment, admission, training,
graduation, and commissioning in all military or similar schools of the Armed Forces of the
Philippines and the Philippine National Police; Republic Act No. 7322 15 increasing the
maternity benefits granted to women in the private sector; Republic Act No. 7877 16 which
outlaws and punishes sexual harassment in the workplace and in the education and training
environment; and Republic Act No. 8042, 17 or the "Migrant Workers and Overseas Filipinos
Act of 1995," which prescribes as a matter of policy, inter alia, the deployment of migrant
workers, with emphasis on women, only in countries where their rights are secure. Likewise,
it would not be amiss to point out that in the Family Code, 18 women's rights in the field of
civil law have been greatly enhanced and expanded.
In the Labor Code, provisions governing the rights of women workers are found in Articles
130 to 138 thereof. Article 130 involves the right against particular kinds of night work while
Article 132 ensures the right of women to be provided with facilities and standards which the
Secretary of Labor may establish to ensure their health and safety. For purposes of labor and
social legislation, a woman working in a nightclub, cocktail lounge, massage clinic, bar or
other similar establishments shall be considered as an employee under Article 138. Article
135, on the other hand, recognizes a woman's right against discrimination with respect to
terms and conditions of employment on account simply of sex. Finally, and this brings us to
the issue at hand, Article 136 explicitly prohibits discrimination merely by reason of the
marriage of a female employee.
3. Acknowledged as paramount in the due process scheme is the constitutional guarantee of
protection to labor and security of tenure. Thus, an employer is required, as a condition sine
qua non prior to severance of the employment ties of an individual under his employ, to
convincingly establish, through substantial evidence, the existence of a valid and just cause
in dispensing with the services of such employee, one's labor being regarded as
constitutionally protected property.
On the other hand, it is recognized that regulation of manpower by the company falls within
the so-called management prerogatives, which prescriptions encompass the matter of hiring,
supervision of workers, work assignments, working methods and assignments, as well as
regulations on the transfer of employees, lay-off of workers, and the discipline, dismissal, and
recall of employees. 19 As put in a case, an employer is free to regulate, according to his
discretion and best business judgment, all aspects of employment, "from hiring to firing,"
except in cases of unlawful discrimination or those which may be provided by law. 20
In the case at bar, petitioner's policy of not accepting or considering as disqualified from work
any woman worker who contracts marriage runs afoul of the test of, and the right against,
discrimination, afforded all women workers by our labor laws and by no less than the
Constitution. Contrary to petitioner's assertion that it dismissed private respondent from
employment on account of her dishonesty, the record discloses clearly that her ties with the
company were dissolved principally because of the company's policy that married women are
not qualified for employment in PT & T, and not merely because of her supposed acts of
dishonesty.
That it was so can easily be seen from the memorandum sent to private respondent by Delia
M. Oficial, the branch supervisor of the company, with the reminder, in the words of the latter,
that "you're fully aware that the company is not accepting married women employee (sic), as
it was verbally instructed to you." 21 Again, in the termination notice sent to her by the same
branch supervisor, private respondent was made to understand that her severance from the
service was not only by reason of her concealment of her married status but, over and on top
of that, was her violation of the company's policy against marriage ("and even told you that
married women employees are not applicable [sic] or accepted in our company.") 22
Parenthetically, this seems to be the curious reason why it was made to appear in the initiatory
pleadings that petitioner was represented in this case only by its said supervisor and not by
its highest ranking officers who would otherwise be solidarily liable with the corporation. 23
Verily, private respondent's act of concealing the true nature of her status from PT & T could
not be properly characterized as willful or in bad faith as she was moved to act the way she
did mainly because she wanted to retain a permanent job in a stable company. In other words,
she was practically forced by that very same illegal company policy into misrepresenting her
civil status for fear of being disqualified from work. While loss of confidence is a just cause
for termination of employment, it should not be simulated. 24 It must rest on an actual breach
of duty committed by the employee and not on the employer's caprices. 25 Furthermore, it
should never be used as a subterfuge for causes which are improper, illegal, or unjustified.
26
In the present controversy, petitioner's expostulations that it dismissed private respondent,
not because the latter got married but because she concealed that fact, does have a hollow
ring. Her concealment, so it is claimed, bespeaks dishonesty hence the consequent loss of
confidence in her which justified her dismissal.
Petitioner would asseverate, therefore, that while it has nothing against marriage, it
nonetheless takes umbrage over the concealment of that fact. This improbable reasoning,
with interstitial distinctions, perturbs the Court since private respondent may well be minded
to claim that the imputation of dishonesty should be the other way around.
Petitioner would have the Court believe that although private respondent defied its policy
against its female employees contracting marriage, what could be an act of insubordination
was inconsequential. What it submits as unforgivable is her concealment of that marriage yet,
8
at the same time, declaring that marriage as a trivial matter to which it supposedly has no
objection. In other words, PT & T says it gives its blessings to its female employees contracting
marriage, despite the maternity leaves and other benefits it would consequently respond for
and which obviously it would have wanted to avoid. If that employee confesses such fact of
marriage, there will be no sanction; but if such employee conceals the same instead of
proceeding to the confessional, she will be dismissed. This line of reasoning does not impress
us as reflecting its true management policy or that we are being regaled with responsible
advocacy.
This Court should be spared the ennui of strained reasoning and the tedium of propositions
which confuse through less than candid arguments. Indeed, petitioner glosses over the fact
that it was its unlawful policy against married women, both on the aspects of qualification and
retention, which compelled private respondent to conceal her supervenient marriage. It was,
however, that very policy alone which was the cause of private respondent's secretive conduct
now complained of. It is then apropos to recall the familiar saying that he who is the cause of
the cause is the cause of the evil caused.
Finally, petitioner's collateral insistence on the admission of private respondent that she
supposedly misappropriated company funds, as an additional ground to dismiss her from
employment, is somewhat insincere and self-serving. Concededly, private respondent
admitted in the course of the proceedings that she failed to remit some of her collections, but
that is an altogether different story. The fact is that she was dismissed solely because of her
concealment of her marital status, and not on the basis of that supposed defalcation of
company funds. That the labor arbiter would thus consider petitioner's submissions on this
supposed dishonesty as a mere afterthought, just to bolster its case for dismissal, is a
perceptive conclusion born of experience in labor cases. For, there was no showing that
private respondent deliberately misappropriated the amount or whether her failure to remit
the same was through negligence and, if so, whether the negligence was in nature simple or
grave. In fact, it was merely agreed that private respondent execute a promissory note to
refund the same, which she did, and the matter was deemed settled as a peripheral issue in
the labor case.
Private respondent, it must be observed, had gained regular status at the time of her
dismissal. When she was served her walking papers on January 29, 1992, she was about to
complete the probationary period of 150 days as she was contracted as a probationary
employee on September 2, 1991. That her dismissal would be effected just when her
probationary period was winding down clearly raises the plausible conclusion that it was done
in order to prevent her from earning security of tenure. 27 On the other hand, her earlier
stints with the company as reliever were undoubtedly those of a regular employee, even if
the same were for fixed periods, as she performed activities which were essential or necessary
in the usual trade and business of PT & T. 28 The primary standard of determining regular
employment is the reasonable connection between the activity performed by the employee in
relation to the business or trade of the employer. 29
As an employee who had therefore gained regular status, and as she had been dismissed
without just cause, she is entitled to reinstatement without loss of seniority rights and other
privileges and to full back wages, inclusive of allowances and other benefits or their monetary
equivalent. 30 However, as she had undeniably committed an act of dishonesty in concealing
her status, albeit under the compulsion of an unlawful imposition of petitioner, the three-
month suspension imposed by respondent NLRC must be upheld to obviate the impression or
inference that such act should be condoned. It would be unfair to the employer if she were to
return to its fold without any sanction whatsoever for her act which was not totally justified.
Thus, her entitlement to back wages, which shall be computed from the time her
compensation was withheld up to the time of her actual reinstatement, shall be reduced by
deducting therefrom the amount corresponding to her three months suspension.
4. The government, to repeat, abhors any stipulation or policy in the nature of that adopted
by petitioner PT & T. The Labor Code state, in no uncertain terms, as follows:
Art. 136. Stipulation against marriage. — It shall be unlawful for an employer to require as a
condition of employment or continuation of employment that a woman shall not get married,
or to stipulate expressly or tacitly that upon getting married, a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise
prejudice a woman employee merely by reason of marriage.
This provision had a studied history for its origin can be traced to Section 8 of Presidential
Decree No. 148, 31 better known as the "Women and
Child Labor Law," which amended paragraph (c), Section 12 of Republic Act No. 679, 32
entitled "An Act to Regulate the Employment of Women and Children, to Provide Penalties for
Violations Thereof, and for Other Purposes." The forerunner to Republic Act No. 679, on the
other hand, was Act No. 3071 which became law on March 16, 1923 and which regulated the
employment of women and children in shops, factories, industrial, agricultural, and mercantile
establishments and other places of labor in the then Philippine Islands.
It would be worthwhile to reflect upon and adopt here the rationalization in Zialcita, et al. vs.
Philippine Air Lines, 33 a decision that emanated from the Office of the President. There, a
policy of Philippine Air Lines requiring that prospective flight attendants must be single and
that they will be automatically separated from the service once they marry was declared void,
it being violative of the clear mandate in Article 136 of the Labor Code with regard to
discrimination against married women. Thus:
Of first impression is the incompatibility of the respondent's policy or regulation with the codal
provision of law. Respondent is resolute in its contention that Article 136 of the Labor Code
applies only to women employed in ordinary occupations and that the prohibition against
marriage of women engaged in extraordinary occupations, like flight attendants, is fair and
reasonable, considering the pecularities of their chosen profession.
We cannot subscribe to the line of reasoning pursued by respondent. All along, it knew that
the controverted policy has already met its doom as early as March 13, 1973 when Presidential
Decree No. 148, otherwise known as the Women and Child Labor Law, was promulgated. But
for the timidity of those affected or their labor unions in challenging the validity of the policy,
the same was able to obtain a momentary reprieve. A close look at Section 8 of said decree,
9
which amended paragraph (c) of Section 12 of Republic Act No. 679, reveals that it is exactly
the same provision reproduced verbatim in Article 136 of the Labor Code, which was
promulgated on May 1, 1974 to take effect six (6) months later, or on November 1, 1974.
It cannot be gainsaid that, with the reiteration of the same provision in the new Labor Code,
all policies and acts against it are deemed illegal and therefore abrogated. True, Article 132
enjoins the Secretary of Labor to establish standards that will ensure the safety and health of
women employees and in appropriate cases shall by regulation require employers to
determine appropriate minimum standards for termination in special occupations, such as
those of flight attendants, but that is precisely the factor that militates against the policy of
respondent. The standards have not yet been established as set forth in the first paragraph,
nor has the Secretary of Labor issued any regulation affecting flight attendants.
It is logical to presume that, in the absence of said standards or regulations which are as yet
to be established, the policy of respondent against marriage is patently illegal. This finds
support in Section 9 of the New Constitution, which provides:
Sec. 9. The State shall afford protection to labor, promote full employment and equality in
employment, ensure equal work opportunities regardless of sex, race, or creed, and regulate
the relations between workers and employees. The State shall assure the rights of workers to
self-organization, collective bargaining, security of tenure, and just and humane conditions of
work . . . .
Moreover, we cannot agree to the respondent's proposition that termination from employment
of flight attendants on account of marriage is a fair and reasonable standard designed for
their own health, safety, protection and welfare, as no basis has been laid therefor. Actually,
respondent claims that its concern is not so much against the continued employment of the
flight attendant merely by reason of marriage as observed by the Secretary of Labor, but
rather on the consequence of marriage-pregnancy. Respondent discussed at length in the
instant appeal the supposed ill effects of pregnancy on flight attendants in the course of their
employment. We feel that this needs no further discussion as it had been adequately explained
by the Secretary of Labor in his decision of May 2, 1976.
In a vain attempt to give meaning to its position, respondent went as far as invoking the
provisions of Articles 52 and 216 of the New Civil Code on the preservation of marriage as an
inviolable social institution and the family as a basic social institution, respectively, as bases
for its policy of non-marriage. In both instances, respondent predicates absence of a flight
attendant from her home for long periods of time as contributory to an unhappy married life.
This is pure conjecture not based on actual conditions, considering that, in this modern world,
sophisticated technology has narrowed the distance from one place to another. Moreover,
respondent overlooked the fact that married flight attendants can program their lives to adapt
to prevailing circumstances and events.
Article 136 is not intended to apply only to women employed in ordinary occupations, or it
should have categorically expressed so. The sweeping intendment of the law, be it on special
or ordinary occupations, is reflected in the whole text and supported by Article 135 that speaks
of non-discrimination on the employment of women.
The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining & Industrial
Corporation 34 considered as void a policy of the same nature. In said case, respondent, in
dismissing from the service the complainant, invoked a policy of the firm to consider female
employees in the project it was undertaking as separated the moment they get married due
to lack of facilities for married women. Respondent further claimed that complainant was
employed in the project with an oral understanding that her services would be terminated
when she gets married. Branding the policy of the employer as an example of "discriminatory
chauvinism" tantamount to denying equal employment opportunities to women simply on
account of their sex, the appellate court struck down said employer policy as unlawful in view
of its repugnance to the Civil Code, Presidential Decree No. 148 and the Constitution.
Under American jurisprudence, job requirements which establish employer preference or
conditions relating to the marital status of an employee are categorized as a "sex-plus"
discrimination where it is imposed on one sex and not on the other. Further, the same should
be evenly applied and must not inflict adverse effects on a racial or sexual group which is
protected by federal job discrimination laws. Employment rules that forbid or restrict the
employment of married women, but do not apply to married men, have been held to violate
Title VII of the United States Civil Rights Act of 1964, the main federal statute prohibiting job
discrimination against employees and applicants on the basis of, among other things, sex. 35
Further, it is not relevant that the rule is not directed against all women but just against
married women. And, where the employer discriminates against married women, but not
against married men, the variable is sex and the discrimination is unlawful. 36 Upon the other
hand, a requirement that a woman employee must remain unmarried could be justified as a
"bona fide occupational qualification," or BFOQ, where the particular requirements of the job
would justify the same, but not on the ground of a general principle, such as the desirability
of spreading work in the workplace. A requirement of that nature would be valid provided it
reflects an inherent quality reasonably necessary for satisfactory job performance. Thus, in
one case, a no-marriage rule applicable to both male and female flight attendants, was
regarded as unlawful since the restriction was not related to the job performance of the flight
attendants. 37
5. Petitioner's policy is not only in derogation of the provisions of Article 136 of the Labor
Code on the right of a woman to be free from any kind of stipulation against marriage in
connection with her employment, but it likewise assaults good morals and public policy,
tending as it does to deprive a woman of the freedom to choose her status, a privilege that
by all accounts inheres in the individual as an intangible and inalienable right. 38 Hence, while
it is true that the parties to a contract may establish any agreements, terms, and conditions
that they may deem convenient, the same should not be contrary to law, morals, good
customs, public order, or public policy. 39 Carried to its logical consequences, it may even be
said that petitioner's policy against legitimate marital bonds would encourage illicit or
common-law relations and subvert the sacrament of marriage.
10
Parenthetically, the Civil Code provisions on the contract of labor state that the relations
between the parties, that is, of capital and labor, are not merely contractual, impressed as
they are with so much public interest that the same should yield to the common good. 40 It
goes on to intone that neither capital nor labor should visit acts of oppression against the
other, nor impair the interest or convenience of the public. 41 In the final reckoning, the
danger of just such a policy against marriage followed by petitioner PT & T is that it strikes at
the very essence, ideals and purpose of marriage as an inviolable social institution and,
ultimately, of the family as the foundation of the nation. 42 That it must be effectively
interdicted here in all its indirect, disguised or dissembled forms as discriminatory conduct
derogatory of the laws of the land is not only in order but imperatively required.
ON THE FOREGOING PREMISES, the petition of Philippine Telegraph and Telephone Company
is hereby DISMISSED for lack of merit, with double costs against petitioner.
SO ORDERED.
.R. No. 181806 March 12, 2014
WESLEYAN UNIVERSITY-PHILIPPINES, Petitioner,
vs.
WESLEYAN UNIVERSITY-PHILIPPINES FACULTY and STAFF ASSOCIATION,
Respondent.
DECISION
DEL CASTILLO, J.:
A Collective Bargaining Agreement (CBA) is a contract entered into by an employer and a
legitimate labor organization concerning the terms and conditions of employment.1 Like any
other contract, it has the force of law between the parties and, thus, should be complied with
in good faith.2 Unilateral changes or suspensions in the implementation of the provisions of
the CBA, therefore, cannot be allowed without the consent of both parties.
This Petition for Review on Certiorari3 under Rule 45 of the Rules of Court assails the
September 25, 2007 Decision4 and the February 5, 2008 Resolution5 of the Court of Appeals
(CA) in CA-G.R. SP No. 97053.
Factual Antecedents
Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational institution
duly organized and existing under the laws of the Philippines.6 Respondent Wesleyan
University-Philippines Faculty and Staff Association, on the other hand, is a duly registered
labor organization7 acting as the sole and exclusive bargaining agent of all rank-and-file
faculty and staff employees of petitioner.8
In December 2003, the parties signed a 5-year CBA9 effective June 1, 2003 until May 31,
2008.10
On August 16, 2005, petitioner, through its President, Atty. Guillermo T. Maglaya (Atty.
Maglaya), issued a Memorandum11 providing guidelines on the implementation of vacation
and sick leave credits as well as vacation leave commutation. The pertinent portions of the
Memorandum read:
1. VACATION AND SICK LEAVE CREDITS
Vacation and sick leave credits are not automatic. They have to be earned. Monthly, a
qualified employee earns an equivalent of 1.25 days credit each for VL and SL. Vacation
Leave and Sick Leave credits of 15 days become complete at the cut off date of May
31 of each year. (Example, only a total of 5 days credit will be given to an employee
for each of sick leave [or] vacation leave, as of month end September, that is, 4
months from June to September multiplied by 1.25 days). An employee, therefore,
who takes VL or SL beyond his leave credits as of date will have to file leave without
pay for leaves beyond his credit.
2. VACATION LEAVE COMMUTATION
Only vacation leave is commuted or monetized to cash. Vacation leave commutation
is effected after the second year of continuous service of an employee. Hence, an
employee who started working June 1, 2005 will get his commutation on May 31, 2007
or thereabout.12
On August 25, 2005, respondent’s President, Cynthia L. De Lara (De Lara) wrote a letter13
to Atty. Maglaya informing him that respondent is not amenable to the unilateral changes
made by petitioner.14 De Lara questioned the guidelines for being violative of existing
practices and the CBA,15 specifically Sections 1 and 2, Article XII of the CBA, to wit:
ARTICLE XII
VACATION LEAVE AND SICK LEAVE
SECTION 1. VACATION LEAVE - All regular and non-tenured rank-and-file faculty and staff
who are entitled to receive shall enjoy fifteen (15) days vacation leave with pay annually.
1.1 All unused vacation leave after the second year of service shall be converted into cash
and be paid to the entitled employee at the end of each school year to be given not later than
August 30 of each year.
SECTION 2. SICK LEAVE - All regular and non-tenured rank-and-file faculty and staff shall
enjoy fifteen (15) days sick leave with pay annually.16
11
On February 8, 2006, a Labor Management Committee (LMC) Meeting was held during which
petitioner advised respondent to file a grievance complaint on the implementation of the
vacation and sick leave policy.17 In the same meeting, petitioner announced its plan of
implementing a one-retirement policy,18 which was unacceptable to respondent.
Ruling of the Voluntary Arbitrator
Unable to settle their differences at the grievance level, the parties referred the matter to a
Voluntary Arbitrator. During the hearing, respondent submitted affidavits to prove that there
is an established practice of giving two retirement benefits, one from the Private Education
Retirement Annuity Association (PERAA) Plan and another from the CBA Retirement Plan.
Sections 1, 2, 3 and 4 of Article XVI of the CBA provide:
ARTICLE XVI
SEPARATION, DISABILITY AND RETIREMENT PAY
SECTION 1. ELIGIBILITY FOR MEMBERSHIP - Membership in the Plan shall be automatic for
all full-time, regular staff and tenured faculty of the University, except the University
President. Membership in the Plan shall commence on the first day of the month coincident
with or next following his statement of Regular/Tenured Employment Status.
SECTION 2. COMPULSORY RETIREMENT DATE - The compulsory retirement date of each
Member shall be as follows:
a. Faculty – The last day of the School Year, coincident with his attainment of age sixty
(60) with at least five (years) of unbroken, credited service.
b. Staff – Upon reaching the age of sixty (60) with at least five (5) years of unbroken,
credited service.
SECTION 3. OPTIONAL RETIREMENT DATE - A Member may opt for an optional retirement
prior to his compulsory retirement. His number of years of service in the University shall be
the basis of computing x x x his retirement benefits regardless of his chronological age.
SECTION 4. RETIREMENT BENEFIT - The retirement benefit shall be a sum equivalent to 100%
of the member’s final monthly salary for compulsory retirement.
For optional retirement, the vesting schedule shall be:
x x x x19
On November 2, 2006, the Voluntary Arbitrator rendered a Decision20 declaring the one-
retirement policy and the Memorandum dated August 16, 2005 contrary to law. The
dispositive portion of the Decision reads:
WHEREFORE, the following award is hereby made:
1. The assailed University guidelines on the availment of vacation and sick leave credits
and vacation leave commutation are contrary to law. The University is consequently
ordered to reinstate the earlier scheme, practice or policy in effect before the issuance
of the said guidelines on August 16, 2005;
2. The "one retirement" policy is contrary to law and is hereby revoked and rescinded.
The University is ordered x x x to resume and proceed with the established practice of
extending to qualified employees retirement benefits under both the CBA and the
PERAA Plan.
3. The other money claims are denied.21
Ruling of the Court of Appeals
Aggrieved, petitioner appealed the case to the CA via a Petition for Review under Rule 43 of
the Rules of Court.
On September 25, 2007, the CA rendered a Decision22 finding the rulings of the Voluntary
Arbitrator supported by substantial evidence. It also affirmed the nullification of the one-
retirement policy and the Memorandum dated August 16, 2005 on the ground that these
unilaterally amended the CBA without the consent of respondent.23 Thus:
WHEREFORE, the instant appeal is DISMISSED for lack of merit.
SO ORDERED.24
Petitioner moved for reconsideration but the same was denied by the CA in its February 5,
2008 Resolution.25
Issues
Hence, this recourse by petitioner raising the following issues:
a.
Whether x x x the [CA] committed grave and palpable error in sustaining the Voluntary
Arbitrator’s ruling that the Affidavits submitted by Respondent WU-PFSA are substantial
12
evidence as defined by the rules and jurisprudence that would substantiate that Petitioner
WU-P has long been in the practice of granting its employees two (2) sets of Retirement
Benefits.
b.
Whether x x x the [CA] committed grave and palpable error in sustaining the Voluntary
Arbitrator’s ruling that a university practice of granting its employees two (2) sets of
Retirement Benefits had already been established as defined by the law and jurisprudence
especially in light of the illegality and lack of authority of such alleged grant.
c.
Whether x x x the [CA] committed grave and palpable error in sustaining the Voluntary
Arbitrator’s ruling that it is incumbent upon Petitioner WU-P to show proof that no Board
Resolution was issued granting two (2) sets of Retirement Benefits.
d.
Whether x x x the [CA] committed grave and palpable error in revoking the 16 August 2005
Memorandum of Petitioner WU-P for being contrary to extant policy.26
Petitioner’s Arguments
Petitioner argues that there is only one retirement plan as the CBA Retirement Plan and the
PERAA Plan are one and the same.27 It maintains that there is no established company
practice or policy of giving two retirement benefits to its employees.28 Assuming, without
admitting, that two retirement benefits were released,29 petitioner insists that these were
done by mere oversight or mistake as there is no Board Resolution authorizing their release.30
And since these benefits are unauthorized and irregular, these cannot ripen into a company
practice or policy.31 As to the affidavits submitted by respondent, petitioner claims that these
are self-serving declarations,32 and thus, should not be given weight and credence.33
In addition, petitioner claims that the Memorandum dated August 16, 2005, which provides
for the guidelines on the implementation of vacation and sick leave credits as well as vacation
leave commutation, is valid because it is in full accord with existing policy.34
Respondent’s Arguments
Respondent belies the claims of petitioner and asserts that there are two retirement plans as
the PERAA Retirement Plan, which has been implemented for more than 30 years, is different
from the CBA Retirement Plan.35 Respondent further avers that it has always been a practice
of petitioner to give two retirement benefits36 and that this practice was established by
substantial evidence as found by both the Voluntary Arbitrator and the CA.37
As to the Memorandum dated August 16, 2005, respondent asserts that it is arbitrary and
contrary to the CBA and existing practices as it added qualifications or limitations which were
not agreed upon by the parties.38
Our Ruling
The Petition is bereft of merit.
The Non-Diminution Rule found in Article 10039 of the Labor Code explicitly prohibits
employers from eliminating or reducing the benefits received by their employees. This rule,
however, applies only if the benefit is based on an express policy, a written contract, or has
ripened into a practice.40 To be considered a practice, it must be consistently and deliberately
made by the employer over a long period of time.41
An exception to the rule is when "the practice is due to error in the construction or application
of a doubtful or difficult question of law."42 The error, however, must be corrected
immediately after its discovery;43 otherwise, the rule on Non-Diminution of Benefits would
still apply.
The practice of giving two retirement
benefits to petitioner’s employees is
supported by substantial evidence.
In this case, respondent was able to present substantial evidence in the form of affidavits to
support its claim that there are two retirement plans. Based on the affidavits, petitioner has
been giving two retirement benefits as early as 1997.44 Petitioner, on the other hand, failed
to present any evidence to refute the veracity of these affidavits. Petitioner’s contention that
these affidavits are self-serving holds no water. The retired employees of petitioner have
nothing to lose or gain in this case as they have already received their retirement benefits.
Thus, they have no reason to perjure themselves. Obviously, the only reason they executed
those affidavits is to bring out the truth. As we see it then, their affidavits, corroborated by
the affidavits of incumbent employees, are more than sufficient to show that the granting of
two retirement benefits to retiring employees had already ripened into a consistent and
deliberate practice.
Moreover, petitioner’s assertion that there is only one retirement plan as the CBA Retirement
Plan and the PERAA Plan are one and the same is not supported by any evidence. There is
nothing in Article XVI of the CBA to indicate or even suggest that the "Plan" referred to in the
CBA is the PERAA Plan. Besides, any doubt in the interpretation of the provisions of the CBA
should be resolved in favor of respondent. In fact, petitioner’s assertion is negated by the
announcement it made during the LMC Meeting on February 8, 2006 regarding its plan of
13
implementing a "one-retirement plan." For if it were true that petitioner was already However, if there is doubt in its interpretation, it should be resolved in favor of labor,48 as
implementing a one-retirement policy, there would have been no need for such this is mandated by no less than the Constitution.49
announcement. Equally damaging is the letter-memorandum45 dated May 11, 2006, entitled
"Suggestions on the defenses we can introduce to justify the abolition of double retirement WHEREFORE, the Petition is hereby DENIED. The assailed September 25, 2007 Decision and
policy," prepared by the petitioner’s legal counsel. the February 5, 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 97053 are hereby
AFFIRMED.
These circumstances, taken together, bolster the finding that the two-retirement policy is a
practice.1âwphi1 Thus, petitioner cannot, without the consent of respondent, eliminate the SO ORDERED.
two-retirement policy and implement a one-retirement policy as this would violate the rule on
non-diminution of benefits. G.R. No. 167614 March 24, 2009

As a last ditch effort to abolish the two-retirement policy, petitioner contends that such ANTONIO M. SERRANO, Petitioner,
practice is illegal or unauthorized and that the benefits were erroneously given by the previous vs.
administration. No evidence, however, was presented by petitioner to substantiate its Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC.,
allegations. Respondents.

Considering the foregoing disquisition, we agree with the findings of the Voluntary Arbitrator, DECISION
as affirmed by the CA, that there is substantial evidence to prove that there is an existing
practice of giving two retirement benefits, one under the PERAA Plan and another under the
AUSTRIA-MARTINEZ, J.:
CBA Retirement Plan.
For decades, the toil of solitary migrants has helped lift entire families and communities out
The Memorandum dated August 16,
of poverty. Their earnings have built houses, provided health care, equipped schools and
2005 is contrary to the existing CBA.
planted the seeds of businesses. They have woven together the world by transmitting ideas
and knowledge from country to country. They have provided the dynamic human link between
Neither do we find any reason to disturb the findings of the CA that the Memorandum dated cultures, societies and economies. Yet, only recently have we begun to understand not only
August 16, 2005 is contrary to the existing CBA. how much international migration impacts development, but how smart public policies can
magnify this effect.
Sections 1 and 2 of Article XII of the CBA provide that all covered employees are entitled to
15 days sick leave and 15 days vacation leave with pay every year and that after the second United Nations Secretary-General Ban Ki-Moon
year of service, all unused vacation leave shall be converted to cash and paid to the employee Global Forum on Migration and Development
at the end of each school year, not later than August 30 of each year. Brussels, July 10, 20071

The Memorandum dated August 16, 2005, however, states that vacation and sick leave credits For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of
are not automatic as leave credits would be earned on a month-to-month basis. This, in effect, Section 10, Republic Act (R.A.) No. 8042,2 to wit:
limits the available leave credits of an employee at the start of the school year. For example,
for the first four months of the school year or from June to September, an employee is only
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just,
entitled to five days vacation leave and five days sick leave.46 Considering that the
valid or authorized cause as defined by law or contract, the workers shall be entitled to the
Memorandum dated August 16, 2005 imposes a limitation not agreed upon by the parties nor
full reimbursement of his placement fee with interest of twelve percent (12%) per annum,
stated in the CBA, we agree with the CA that it must be struck down.
plus his salaries for the unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term, whichever is less.
In closing, it may not be amiss to mention that when the provision of the CBA is clear, leaving
no doubt on the intention of the parties, the literal meaning of the stipulation shall govem.47
x x x x (Emphasis and underscoring supplied)

14
does not magnify the contributions of overseas Filipino workers (OFWs) to national Petitioner filed with the Labor Arbiter (LA) a Complaint 9 against respondents for constructive
development, but exacerbates the hardships borne by them by unduly limiting their dismissal and for payment of his money claims in the total amount of US$26,442.73, broken
entitlement in case of illegal dismissal to their lump-sum salary either for the unexpired down as follows:
portion of their employment contract "or for three months for every year of the unexpired
term, whichever is less" (subject clause). Petitioner claims that the last clause violates the
May 27/31, 1998 (5 days) incl. Leave pay US$ 413.90
OFWs' constitutional rights in that it impairs the terms of their contract, deprives them of
equal protection and denies them due process. June 01/30, 1998 2,590.00
July 01/31, 1998 2,590.00
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the
December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the Court of Appeals (CA), which August 01/31, 1998 2,590.00
applied the subject clause, entreating this Court to declare the subject clause unconstitutional.
Sept. 01/30, 1998 2,590.00
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. Oct. 01/31, 1998 2,590.00
(respondents) under a Philippine Overseas Employment Administration (POEA)-approved
Contract of Employment with the following terms and conditions: Nov. 01/30, 1998 2,590.00
Dec. 01/31, 1998 2,590.00
Duration of contract 12 months
Jan. 01/31, 1999 2,590.00
Position Chief Officer Feb. 01/28, 1999 2,590.00
Basic monthly salary US$1,400.00 Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00
Hours of work 48.0 hours per week --------------------
--------------------
Overtime US$700.00 per month --------------------
Vacation leave with pay 7.00 days per month5 --------------------
25,382.23
On March 19, 1998, the date of his departure, petitioner was constrained to accept a Amount adjusted to chief mate's salary
downgraded employment contract for the position of Second Officer with a monthly salary of
US$1,000.00, upon the assurance and representation of respondents that he would be made (March 19/31, 1998 to April 1/30, 1998) + 1,060.5010
Chief Officer by the end of April 1998.6
--------------------
--------------------
Respondents did not deliver on their promise to make petitioner Chief Officer. 7 Hence, --------------------
petitioner refused to stay on as Second Officer and was repatriated to the Philippines on May --------------------
26, 1998.8 --------------

Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up TOTAL CLAIM US$ 26,442.7311
to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only
two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) as well as moral and exemplary damages and attorney's fees.
months and twenty-three (23) days.
The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner
illegal and awarding him monetary benefits, to wit:

15
WHEREFORE, premises considered, judgment is hereby rendered declaring that the WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are hereby
dismissal of the complainant (petitioner) by the respondents in the above-entitled case ordered to pay complainant, jointly and severally, in Philippine currency, at the
was illegal and the respondents are hereby ordered to pay the complainant prevailing rate of exchange at the time of payment the following:
[petitioner], jointly and severally, in Philippine Currency, based on the rate of
exchange prevailing at the time of payment, the amount of EIGHT THOUSAND
1. Three (3) months salary
SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00), representing the
complainant’s salary for three (3) months of the unexpired portion of the $1,400 x 3 US$4,200.00
aforesaid contract of employment.1avvphi1
2. Salary differential 45.00
The respondents are likewise ordered to pay the complainant [petitioner], jointly and
severally, in Philippine Currency, based on the rate of exchange prevailing at the time US$4,245.00
of payment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00), 12 representing the 3. 10% Attorney’s fees 424.50
complainant’s claim for a salary differential. In addition, the respondents are hereby
ordered to pay the complainant, jointly and severally, in Philippine Currency, at the TOTAL US$4,669.50
exchange rate prevailing at the time of payment, the complainant’s (petitioner's) claim
for attorney’s fees equivalent to ten percent (10%) of the total amount awarded to the
aforesaid employee under this Decision. The other findings are affirmed.

The claims of the complainant for moral and exemplary damages are hereby SO ORDERED.19
DISMISSED for lack of merit.
The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by
All other claims are hereby DISMISSED. reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042
"does not provide for the award of overtime pay, which should be proven to have been actually
performed, and for vacation leave pay."20
SO ORDERED.13 (Emphasis supplied)

In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his
computation on the salary period of three months only -- rather than the entire
unexpired portion of nine months and 23 days of petitioner's employment contract -
applying the subject clause. However, the LA applied the salary rate of US$2,590.00,
consisting of petitioner's "[b]asic salary, US$1,400.00/month + US$700.00/month,
fixed overtime pay, + US$490.00/month, vacation leave pay = eventually gave due course to it, as directed by this Court in its Resolution dated August 7,
US$2,590.00/compensation per month."14
Respondents appealed15 to the National Labor Relations Commission (NLRC) to
question the finding of the LA that petitioner was illegally dismissed.
Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not
applying the ruling of the Court in Triple Integrated Services, Inc. v. National Labor
Relations Commission17 that in case of illegal dismissal, OFWs are entitled to their
salaries for the unexpired portion of their contracts.18
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the
constitutionality of the subject clause.21 The NLRC denied the motion.22
Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional challenge
against the subject clause.24 After initially dismissing the petition on a technicality, the CA
2003 which granted the petition for certiorari, docketed as G.R. No. 151833, filed by
petitioner.
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of
the applicable salary rate; however, the CA skirted the constitutional issue raised by
petitioner.25
His Motion for Reconsideration26 having been denied by the CA, 27 petitioner brings his cause
to this Court on the following grounds:

In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit: I

16
The Court of Appeals and the labor tribunals have decided the case in a way not in accord
with applicable decision of the Supreme Court involving similar issue of granting unto the
migrant worker back wages equal to the unexpired portion of his contract of employment
instead of limiting it to three (3) months
II
In the alternative that the Court of Appeals and the Labor Tribunals were merely applying
their interpretation of Section 10 of Republic Act No. 8042, it is submitted that the Court of
Appeals gravely erred in law when it failed to discharge its judicial duty to decide questions
of substance not theretofore determined by the Honorable Supreme Court, particularly, the
constitutional issues raised by the petitioner on the constitutionality of said law, which
unreasonably, unfairly and arbitrarily limits payment of the award for back wages of overseas
workers to three (3) months.
III
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042,
the Court of Appeals gravely erred in law in excluding from petitioner’s award the overtime
pay and vacation pay provided in his contract since under the contract they form part of his
salary.28
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old
and sickly, and he intends to make use of the monetary award for his medical treatment and
medication.29 Required to comment, counsel for petitioner filed a motion, urging the court to
allow partial execution of the undisputed monetary award and, at the same time, praying that
the constitutional question be resolved.30
Considering that the parties have filed their respective memoranda, the Court now takes up
the full merit of the petition mindful of the extreme importance of the constitutional question
raised therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is
not disputed. Likewise not disputed is the salary differential of US$45.00 awarded to petitioner
in all three fora. What remains disputed is only the computation of the lump-sum salary to be
awarded to petitioner by reason of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner
at the monthly rate of US$1,400.00 covering the period of three months out of the unexpired
portion of nine months and 23 days of his employment contract or a total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in addition to
the US$4,200.00 awarded by the NLRC and the CA, he is entitled to US$21,182.23 more or
a total of US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left
of his employment contract, computed at the monthly rate of US$2,590.00.31
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly impairs the
freedom of OFWs to negotiate for and stipulate in their overseas employment contracts a
determinate employment period and a fixed salary package. 32 It also impinges on the equal
protection clause, for it treats OFWs differently from local Filipino workers (local workers) by
putting a cap on the amount of lump-sum salary to which OFWs are entitled in case of illegal
dismissal, while setting no limit to the same monetary award for local workers when their
dismissal is declared illegal; that the disparate treatment is not reasonable as there is no
substantial distinction between the two groups; 33 and that it defeats Section 18,34 Article II
of the Constitution which guarantees the protection of the rights and welfare of all Filipino
workers, whether deployed locally or overseas.35
Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line
with existing jurisprudence on the issue of money claims of illegally dismissed OFWs. Though
there are conflicting rulings on this, petitioner urges the Court to sort them out for the
guidance of affected OFWs.36
Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042
serves no other purpose but to benefit local placement agencies. He marks the statement
made by the Solicitor General in his Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment of money
claims in the event that jurisdiction over the foreign employer is not acquired by the court or
if the foreign employer reneges on its obligation. Hence, placement agencies that are in good
faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign
employer. To protect them and to promote their continued helpful contribution in deploying
Filipino migrant workers, liability for money claims was reduced under Section 10 of R.A. No.
8042. 37 (Emphasis supplied)
Petitioner argues that in mitigating the solidary liability of placement agencies, the subject
clause sacrifices the well-being of OFWs. Not only that, the provision makes foreign employers
better off than local employers because in cases involving the illegal dismissal of employees,
foreign employers are liable for salaries covering a maximum of only three months of the
unexpired employment contract while local employers are liable for the full lump-sum salaries
of their employees. As petitioner puts it:
In terms of practical application, the local employers are not limited to the amount of
backwages they have to give their employees they have illegally dismissed, following well-
17
entrenched and unequivocal jurisprudence on the matter. On the other hand, foreign
employers will only be limited to giving the illegally dismissed migrant workers the maximum
of three (3) months unpaid salaries notwithstanding the unexpired term of the contract that
can be more than three (3) months.38
Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives
him of the salaries and other emoluments he is entitled to under his fixed-period employment
contract.39
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the constitutional issue should
not be entertained, for this was belatedly interposed by petitioner in his appeal before the CA,
and not at the earliest opportunity, which was when he filed an appeal before the NLRC.40
The Arguments of the Solicitor General
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15, 1995,
its provisions could not have impaired petitioner's 1998 employment contract. Rather, R.A.
No. 8042 having preceded petitioner's contract, the provisions thereof are deemed part of the
minimum terms of petitioner's employment, especially on the matter of money claims, as this
was not stipulated upon by the parties.42
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of
their employment, such that their rights to monetary benefits must necessarily be treated
differently. The OSG enumerates the essential elements that distinguish OFWs from local
workers: first, while local workers perform their jobs within Philippine territory, OFWs perform
their jobs for foreign employers, over whom it is difficult for our courts to acquire jurisdiction,
or against whom it is almost impossible to enforce judgment; and second, as held in Coyoca
v. National Labor Relations Commission43 and Millares v. National Labor Relations
Commission,44 OFWs are contractual employees who can never acquire regular employment
status, unlike local workers who are or can become regular employees. Hence, the OSG posits
that there are rights and privileges exclusive to local workers, but not available to OFWs; that
these peculiarities make for a reasonable and valid basis for the differentiated treatment
under the subject clause of the money claims of OFWs who are illegally dismissed. Thus, the
provision does not violate the equal protection clause nor Section 18, Article II of the
Constitution.45
Lastly, the OSG defends the rationale behind the subject clause as a police power measure
adopted to mitigate the solidary liability of placement agencies for this "redounds to the
benefit of the migrant workers whose welfare the government seeks to promote. The survival
of legitimate placement agencies helps [assure] the government that migrant workers are
properly deployed and are employed under decent and humane conditions." 46
The Court's Ruling
The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial review of the acts of its co-
equals, such as the Congress, it does so only when these conditions obtain: (1) that there is
an actual case or controversy involving a conflict of rights susceptible of judicial
determination;47 (2) that the constitutional question is raised by a proper party 48 and at the
earliest opportunity;49 and (3) that the constitutional question is the very lis mota of the
case,50 otherwise the Court will dismiss the case or decide the same on some other ground.51
Without a doubt, there exists in this case an actual controversy directly involving petitioner
who is personally aggrieved that the labor tribunals and the CA computed his monetary award
based on the salary period of three months only as provided under the subject clause.
The constitutional challenge is also timely. It should be borne in mind that the requirement
that a constitutional issue be raised at the earliest opportunity entails the interposition of the
issue in the pleadings before a competent court, such that, if the issue is not raised in the
pleadings before that competent court, it cannot be considered at the trial and, if not
considered in the trial, it cannot be considered on appeal. 52 Records disclose that the issue
on the constitutionality of the subject clause was first raised, not in petitioner's appeal with
the NLRC, but in his Motion for Partial Reconsideration with said labor tribunal, 53 and reiterated
in his Petition for Certiorari before the CA.54 Nonetheless, the issue is deemed seasonably
raised because it is not the NLRC but the CA which has the competence to resolve the
constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-judicial function
– its function in the present case is limited to determining questions of fact to which the
legislative policy of R.A. No. 8042 is to be applied and to resolving such questions in
accordance with the standards laid down by the law itself; 55 thus, its foremost function is to
administer and enforce R.A. No. 8042, and not to inquire into the validity of its provisions.
The CA, on the other hand, is vested with the power of judicial review or the power to declare
unconstitutional a law or a provision thereof, such as the subject clause. 56 Petitioner's
interposition of the constitutional issue before the CA was undoubtedly seasonable. The CA
was therefore remiss in failing to take up the issue in its decision.
The third condition that the constitutional issue be critical to the resolution of the case likewise
obtains because the monetary claim of petitioner to his lump-sum salary for the entire
unexpired portion of his 12-month employment contract, and not just for a period of three
months, strikes at the very core of the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the subject clause.
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
of contracts?
18
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract
on the term of his employment and the fixed salary package he will receive57 is not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor sector,
without distinction as to place of deployment, full protection of their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions
translate to economic security and parity: all monetary benefits should be equally enjoyed by
workers of similar category, while all monetary obligations should be borne by them in equal
degree; none should be denied the protection of the laws which is enjoyed by, or spared the
burden imposed on, others in like circumstances.65

The prohibition is aligned with the general principle that laws newly enacted have only a Such rights are not absolute but subject to the inherent power of Congress to incorporate,
prospective operation,58 and cannot affect acts or contracts already perfected;59 however, as when it sees fit, a system of classification into its legislation; however, to be valid, the
to laws already in existence, their provisions are read into contracts and deemed a part classification must comply with these requirements: 1) it is based on substantial distinctions;
thereof.60 Thus, the non-impairment clause under Section 10, Article II is limited in application 2) it is germane to the purposes of the law; 3) it is not limited to existing conditions only;
to laws about to be enacted that would in any way derogate from existing acts or contracts and 4) it applies equally to all members of the class.66
by enlarging, abridging or in any manner changing the intention of the parties thereto.
There are three levels of scrutiny at which the Court reviews the constitutionality of a
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution classification embodied in a law: a) the deferential or rational basis scrutiny in which the
of the employment contract between petitioner and respondents in 1998. Hence, it cannot be challenged classification needs only be shown to be rationally related to serving a legitimate
argued that R.A. No. 8042, particularly the subject clause, impaired the employment contract state interest;67 b) the middle-tier or intermediate scrutiny in which the government must
of the parties. Rather, when the parties executed their 1998 employment contract, they were show that the challenged classification serves an important state interest and that the
deemed to have incorporated into it all the provisions of R.A. No. 8042. classification is at least substantially related to serving that interest; 68 and c) strict judicial
scrutiny69 in which a legislative classification which impermissibly interferes with the exercise
of a fundamental right70 or operates to the peculiar disadvantage of a suspect class 71 is
But even if the Court were to disregard the timeline, the subject clause may not be declared
presumed unconstitutional, and the burden is upon the government to prove that the
unconstitutional on the ground that it impinges on the impairment clause, for the law was
classification is necessary to achieve a compelling state interest and that it is the least
enacted in the exercise of the police power of the State to regulate a business, profession or
restrictive means to protect such interest.72
calling, particularly the recruitment and deployment of OFWs, with the noble end in view of
ensuring respect for the dignity and well-being of OFWs wherever they may be employed. 61
Police power legislations adopted by the State to promote the health, morals, peace, Under American jurisprudence, strict judicial scrutiny is triggered by suspect classifications73
education, good order, safety, and general welfare of the people are generally applicable not based on race74 or gender75 but not when the classification is drawn along income categories.76
only to future contracts but even to those already in existence, for all private contracts must
yield to the superior and legitimate measures taken by the State to promote public welfare. 62 It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas)
Employee Association, Inc. v. Bangko Sentral ng Pilipinas,77 the constitutionality of a provision
Does the subject clause violate Section 1, in the charter of the Bangko Sentral ng Pilipinas (BSP), a government financial institution
Article III of the Constitution, and Section 18, (GFI), was challenged for maintaining its rank-and-file employees under the Salary
Article II and Section 3, Article XIII on labor Standardization Law (SSL), even when the rank-and-file employees of other GFIs had been
as a protected sector? exempted from the SSL by their respective charters. Finding that the disputed provision
contained a suspect classification based on salary grade, the Court deliberately employed the
standard of strict judicial scrutiny in its review of the constitutionality of said provision. More
The answer is in the affirmative.
significantly, it was in this case that the Court revealed the broad outlines of its judicial
philosophy, to wit:
Section 1, Article III of the Constitution guarantees:
Congress retains its wide discretion in providing for a valid classification, and its policies
No person shall be deprived of life, liberty, or property without due process of law nor shall should be accorded recognition and respect by the courts of justice except when they run
any person be denied the equal protection of the law. afoul of the Constitution. The deference stops where the classification violates a fundamental
19
right, or prejudices persons accorded special protection by the Constitution. When
these violations arise, this Court must discharge its primary role as the vanguard of
constitutional guaranties, and require a stricter and more exacting adherence to constitutional
limitations. Rational basis should not suffice.
Admittedly, the view that prejudice to persons accorded special protection by the Constitution
requires a stricter judicial scrutiny finds no support in American or English jurisprudence.
Nevertheless, these foreign decisions and authorities are not per se controlling in this
jurisdiction. At best, they are persuasive and have been used to support many of our
decisions. We should not place undue and fawning reliance upon them and regard them as
indispensable mental crutches without which we cannot come to our own decisions through
the employment of our own endowments. We live in a different ambience and must decide
our own problems in the light of our own interests and needs, and of our qualities and even
idiosyncrasies as a people, and always with our own concept of law and justice. Our laws must
be construed in accordance with the intention of our own lawmakers and such intent may be
deduced from the language of each law and the context of other local legislation related
thereto. More importantly, they must be construed to serve our own public interest which is
the be-all and the end-all of all our laws. And it need not be stressed that our public interest
is distinct and different from others.
xxxx
Further, the quest for a better and more "equal" world calls for the use of equal protection as
a tool of effective judicial intervention.
Equality is one ideal which cries out for bold attention and action in the Constitution. The
Preamble proclaims "equality" as an ideal precisely in protest against crushing inequities in
Philippine society. The command to promote social justice in Article II, Section 10, in "all
phases of national development," further explicitated in Article XIII, are clear commands to
the State to take affirmative action in the direction of greater equality. x x x [T]here is thus
in the Philippine Constitution no lack of doctrinal support for a more vigorous state effort
towards achieving a reasonable measure of equality.
Our present Constitution has gone further in guaranteeing vital social and economic rights to
marginalized groups of society, including labor. Under the policy of social justice, the law
bends over backward to accommodate the interests of the working class on the humane
justification that those with less privilege in life should have more in law. And the obligation
to afford protection to labor is incumbent not only on the legislative and executive branches
but also on the judiciary to translate this pledge into a living reality. Social justice calls for
the humanization of laws and the equalization of social and economic forces by the State so
that justice in its rational and objectively secular conception may at least be approximated.
xxxx
Under most circumstances, the Court will exercise judicial restraint in deciding questions of
constitutionality, recognizing the broad discretion given to Congress in exercising its
legislative power. Judicial scrutiny would be based on the "rational basis" test, and the
legislative discretion would be given deferential treatment.
But if the challenge to the statute is premised on the denial of a fundamental right, or the
perpetuation of prejudice against persons favored by the Constitution with special
protection, judicial scrutiny ought to be more strict. A weak and watered down view
would call for the abdication of this Court’s solemn duty to strike down any law repugnant to
the Constitution and the rights it enshrines. This is true whether the actor committing the
unconstitutional act is a private person or the government itself or one of its instrumentalities.
Oppressive acts will be struck down regardless of the character or nature of the actor.
xxxx
In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-
employee status. It is akin to a distinction based on economic class and status, with the higher
grades as recipients of a benefit specifically withheld from the lower grades. Officers of the
BSP now receive higher compensation packages that are competitive with the industry, while
the poorer, low-salaried employees are limited to the rates prescribed by the SSL. The
implications are quite disturbing: BSP rank-and-file employees are paid the strictly
regimented rates of the SSL while employees higher in rank - possessing higher and better
education and opportunities for career advancement - are given higher compensation
packages to entice them to stay. Considering that majority, if not all, the rank-and-file
employees consist of people whose status and rank in life are less and limited, especially in
terms of job marketability, it is they - and not the officers - who have the real economic and
financial need for the adjustment . This is in accord with the policy of the Constitution "to free
the people from poverty, provide adequate social services, extend to them a decent standard
of living, and improve the quality of life for all." Any act of Congress that runs counter to this
constitutional desideratum deserves strict scrutiny by this Court before it can pass muster.
(Emphasis supplied)
Imbued with the same sense of "obligation to afford protection to labor," the Court in the
present case also employs the standard of strict judicial scrutiny, for it perceives in the subject
clause a suspect classification prejudicial to OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs.
However, a closer examination reveals that the subject clause has a discriminatory intent
against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis-à-vis OFWs with
employment contracts of one year or more;
Second, among OFWs with employment contracts of more than one year; and
20
 Third, OFWs vis-à-vis local workers with fixed-period employment;
OFWs with employment contracts of less than one year vis-à-vis OFWs with
employment contracts of one year or more
As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National Labor
Relations Commission79 (Second Division, 1999) that the Court laid down the following rules
on the application of the periods prescribed under Section 10(5) of R.A. No. 804, to wit:
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission
(Third Division, December 1998),83 which involved an OFW (therein respondent Erlinda
Osdana) who was originally granted a 12-month contract, which was deemed renewed for
another 12 months. After serving for one year and seven-and-a-half months, respondent
Osdana was illegally dismissed, and the Court awarded her salaries for the entire unexpired
portion of four and one-half months of her contract.
The Marsaman interpretation of Section 10(5) has since been adopted in the following cases:

A plain reading of Sec. 10 clearly reveals that the choice of which amount to award Case Title Contract Period of Unexpired Period Applied
an illegally dismissed overseas contract worker, i.e., whether his salaries for the Period Service Period in the
unexpired portion of his employment contract or three (3) months’ salary for every Computation of
year of the unexpired term, whichever is less, comes into play only when the the Monetary
employment contract concerned has a term of at least one (1) year or more. This is Award
evident from the words "for every year of the unexpired term" which follows the
words "salaries x x x for three months." To follow petitioners’ thinking that private Skippers v. 6 months 2 months 4 months 4 months
respondent is entitled to three (3) months salary only simply because it is the lesser amount Maguad84
is to completely disregard and overlook some words used in the statute while giving effect to
some. This is contrary to the well-established rule in legal hermeneutics that in interpreting Bahia 9 months 8 months 4 months 4 months
a statute, care should be taken that every part or word thereof be given effect since the law- Shipping v.
making body is presumed to know the meaning of the words employed in the statue and to Reynaldo
have used them advisedly. Ut res magis valeat quam pereat. 80 (Emphasis supplied) Chua 85

Centennial 9 months 4 months 5 months 5 months

In Marsaman, the OFW involved was illegally dismissed two months into his 10-month Transmarine
contract, but was awarded his salaries for the remaining 8 months and 6 days of his contract. v. dela Cruz l86

Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings Talidano v. 12 months 3 months 9 months 3 months
on Section 10(5). One was Asian Center for Career and Employment System and Services v. Falcon87
National Labor Relations Commission (Second Division, October 1998),81 which involved an
OFW who was awarded a two-year employment contract, but was dismissed after working for Univan v. CA 12 months 3 months 9 months 3 months
88
one year and two months. The LA declared his dismissal illegal and awarded him SR13,600.00
as lump-sum salary covering eight months, the unexpired portion of his contract. On appeal,
Oriental v. CA 12 months more than 2 10 months 3 months
the Court reduced the award to SR3,600.00 equivalent to his three months’ salary, this being 89
months
the lesser value, to wit:
PCL v. NLRC90 12 months more than 2 more or less 9 3 months
Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment without months months
just, valid or authorized cause is entitled to his salary for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired term, whichever Olarte v. 12 months 21 days 11 months and 3 months
is less. Nayona91 9 days

JSS v.Ferrer92 12 months 16 days 11 months and 3 months

In the case at bar, the unexpired portion of private respondent’s employment contract is eight 24 days
(8) months. Private respondent should therefore be paid his basic salary corresponding to
three (3) months or a total of SR3,600.82

21
 OFWs, no matter how long the period of their employment contracts, were entitled to their
Pentagon v. 12 months 9 months 2 months and 2 months and 23
salaries for the entire unexpired portions of their contracts. The matrix below speaks for itself:
Adelantar93 and 7 days 23 days days

Phil. Employ v. 12 months 10 months 2 months Unexpired portion

Case Title Contract Period of Unexpired Period Applied in
Paramio, et Period Service Period the Computation
al.94
of the Monetary
Flourish 2 years 26 days 23 months and 6 months or 3 Award
Maritime v. 4 days months for each
ATCI v. CA, et 2 years 2 months 22 months 22 months
Almanzor 95
year of contract al.98
Athenna 1 year, 10 1 month 1 year, 9 6 months or 3
Phil. 2 years 7 days 23 months 23 months and 23
Manpower v. months months and 28 months for each
Integrated v. and 23 days days
Villanos 96 and 28 days year of contract NLRC99
days
JGB v. NLC100 2 years 9 months 15 months 15 months
As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories. Agoy v. 2 years 2 months 22 months 22 months
The first category includes OFWs with fixed-period employment contracts of less than one NLRC101
year; in case of illegal dismissal, they are entitled to their salaries for the entire unexpired
portion of their contract. The second category consists of OFWs with fixed-period employment EDI v. NLRC, 2 years 5 months 19 months 19 months
contracts of one year or more; in case of illegal dismissal, they are entitled to monetary award et al.102
equivalent to only 3 months of the unexpired portion of their contracts.
Barros v. 12 months 4 months 8 months 8 months
The disparity in the treatment of these two groups cannot be discounted. In Skippers, the NLRC, et al.103
respondent OFW worked for only 2 months out of his 6-month contract, but was awarded his Philippine 12 months 6 months 5 months 5 months and 18
salaries for the remaining 4 months. In contrast, the respondent OFWs in Oriental and PCL Transmarine and 22 days and 18 days days
who had also worked for about 2 months out of their 12-month contracts were awarded their v. Carilla104
salaries for only 3 months of the unexpired portion of their contracts. Even the OFWs involved
in Talidano and Univan who had worked for a longer period of 3 months out of their 12-month
contracts before being illegally dismissed were awarded their salaries for only 3 months. It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired
portions thereof, were treated alike in terms of the computation of their monetary benefits in
To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with case of illegal dismissal. Their claims were subjected to a uniform rule of computation: their
an employment contract of 10 months at a monthly salary rate of US$1,000.00 and a basic salaries multiplied by the entire unexpired portion of their employment contracts.
hypothetical OFW-B with an employment contract of 15 months with the same monthly salary
rate of US$1,000.00. Both commenced work on the same day and under the same employer, The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of
and were illegally dismissed after one month of work. Under the subject clause, OFW-A will computation of the money claims of illegally dismissed OFWs based on their employment
be entitled to US$9,000.00, equivalent to his salaries for the remaining 9 months of his periods, in the process singling out one category whose contracts have an unexpired portion
contract, whereas OFW-B will be entitled to only US$3,000.00, equivalent to his salaries for of one year or more and subjecting them to the peculiar disadvantage of having their
3 months of the unexpired portion of his contract, instead of US$14,000.00 for the unexpired monetary awards limited to their salaries for 3 months or for the unexpired portion thereof,
portion of 14 months of his contract, as the US$3,000.00 is the lesser amount. whichever is less, but all the while sparing the other category from such prejudice, simply
because the latter's unexpired contracts fall short of one year.
The disparity becomes more aggravating when the Court takes into account jurisprudence
that, prior to the effectivity of R.A. No. 8042 on July 14, 1995, 97 illegally dismissed Among OFWs With Employment Contracts of More Than One Year

22
Upon closer examination of the terminology employed in the subject clause, the Court now
has misgivings on the accuracy of the Marsaman interpretation.
The Court notes that the subject clause "or for three (3) months for every year of the
unexpired term, whichever is less" contains the qualifying phrases "every year" and
"unexpired term." By its ordinary meaning, the word "term" means a limited or definite extent
of time.105 Corollarily, that "every year" is but part of an "unexpired term" is significant in
many ways: first, the unexpired term must be at least one year, for if it were any shorter,
there would be no occasion for such unexpired term to be measured by every year; and
second, the original term must be more than one year, for otherwise, whatever would be the
unexpired term thereof will not reach even a year. Consequently, the more decisive factor in
the determination of when the subject clause "for three (3) months for every year of the
unexpired term, whichever is less" shall apply is not the length of the original contract period
as held in Marsaman,106 but the length of the unexpired portion of the contract period -- the
subject clause applies in cases when the unexpired portion of the contract period is at least
one year, which arithmetically requires that the original contract period be more than one
year.
Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs
whose contract periods are for more than one year: those who are illegally dismissed with
less than one year left in their contracts shall be entitled to their salaries for the entire
unexpired portion thereof, while those who are illegally dismissed with one year or more
remaining in their contracts shall be covered by the subject clause, and their monetary
benefits limited to their salaries for three months only.
To concretely illustrate the application of the foregoing interpretation of the subject clause,
the Court assumes hypothetical OFW-C and OFW-D, who each have a 24-month contract at
a salary rate of US$1,000.00 per month. OFW-C is illegally dismissed on the 12th month, and
OFW-D, on the 13th month. Considering that there is at least 12 months remaining in the
contract period of OFW-C, the subject clause applies to the computation of the latter's
monetary benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the latter's total
salaries for the 12 months unexpired portion of the contract, but to the lesser amount of
US$3,000.00 or the latter's salaries for 3 months out of the 12-month unexpired term of the
contract. On the other hand, OFW-D is spared from the effects of the subject clause, for there
are only 11 months left in the latter's contract period. Thus, OFW-D will be entitled to
US$11,000.00, which is equivalent to his/her total salaries for the entire 11-month unexpired
portion.
OFWs vis-à-vis Local Workers
With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary
awards of illegally dismissed OFWs was in place. This uniform system was applicable even to
local workers with fixed-term employment.107
The earliest rule prescribing a uniform system of computation was actually Article 299 of the
Code of Commerce (1888),108 to wit:
Article 299. If the contracts between the merchants and their shop clerks and employees
should have been made of a fixed period, none of the contracting parties, without the consent
of the other, may withdraw from the fulfillment of said contract until the termination of the
period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and damage suffered, with
the exception of the provisions contained in the following articles.
In Reyes v. The Compañia Maritima,109 the Court applied the foregoing provision to determine
the liability of a shipping company for the illegal discharge of its managers prior to the
expiration of their fixed-term employment. The Court therein held the shipping company liable
for the salaries of its managers for the remainder of their fixed-term employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of
Commerce which provides:
Article 605. If the contracts of the captain and members of the crew with the agent should be
for a definite period or voyage, they cannot be discharged until the fulfillment of their
contracts, except for reasons of insubordination in serious matters, robbery, theft, habitual
drunkenness, and damage caused to the vessel or to its cargo by malice or manifest or proven
negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,110 in
which the Court held the shipping company liable for the salaries and subsistence allowance
of its illegally dismissed employees for the entire unexpired portion of their employment
contracts.
While Article 605 has remained good law up to the present, 111 Article 299 of the Code of
Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and
for a certain work cannot leave or be dismissed without sufficient cause, before the fulfillment
of the contract. (Emphasis supplied.)
Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article 1586 as
a conjunctive "and" so as to apply the provision to local workers who are employed for a time
certain although for no particular skill. This interpretation of Article 1586 was reiterated in
Garcia Palomar v. Hotel de France Company.113 And in both Lemoine and Palomar, the Court
adopted the general principle that in actions for wrongful discharge founded on Article 1586,
23
local workers are entitled to recover damages to the extent of the amount stipulated to be
paid to them by the terms of their contract. On the computation of the amount of such
damages, the Court in Aldaz v. Gay114 held:
The doctrine is well-established in American jurisprudence, and nothing has been brought to
our attention to the contrary under Spanish jurisprudence, that when an employee is
wrongfully discharged it is his duty to seek other employment of the same kind in the same
community, for the purpose of reducing the damages resulting from such wrongful discharge.
However, while this is the general rule, the burden of showing that he failed to make an effort
to secure other employment of a like nature, and that other employment of a like nature was
obtainable, is upon the defendant. When an employee is wrongfully discharged under a
contract of employment his prima facie damage is the amount which he would be entitled to
had he continued in such employment until the termination of the period. (Howard vs. Daly,
61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich.,
43.)115 (Emphasis supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term
employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2
(Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book IV. 116
Much like Article 1586 of the Civil Code of 1889, the new provisions of the Civil Code do not
expressly provide for the remedies available to a fixed-term worker who is illegally discharged.
However, it is noted that in Mackay Radio & Telegraph Co., Inc. v. Rich,117 the Court carried
over the principles on the payment of damages underlying Article 1586 of the Civil Code of
1889 and applied the same to a case involving the illegal discharge of a local worker whose
fixed-period employment contract was entered into in 1952, when the new Civil Code was
already in effect.118
More significantly, the same principles were applied to cases involving overseas Filipino
workers whose fixed-term employment contracts were illegally terminated, such as in First
Asian Trans & Shipping Agency, Inc. v. Ople,119 involving seafarers who were illegally
discharged. In Teknika Skills and Trade Services, Inc. v. National Labor Relations
Commission,120 an OFW who was illegally dismissed prior to the expiration of her fixed-period
employment contract as a baby sitter, was awarded salaries corresponding to the unexpired
portion of her contract. The Court arrived at the same ruling in Anderson v. National Labor
Relations Commission,121 which involved a foreman hired in 1988 in Saudi Arabia for a fixed
term of two years, but who was illegally dismissed after only nine months on the job -- the
Court awarded him salaries corresponding to 15 months, the unexpired portion of his contract.
In Asia World Recruitment, Inc. v. National Labor Relations Commission,122 a Filipino working
as a security officer in 1989 in Angola was awarded his salaries for the remaining period of
his 12-month contract after he was wrongfully discharged. Finally, in Vinta Maritime Co., Inc.
v. National Labor Relations Commission, 123 an OFW whose 12-month contract was illegally
cut short in the second month was declared entitled to his salaries for the remaining 10
months of his contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who
were illegally discharged were treated alike in terms of the computation of their money claims:
they were uniformly entitled to their salaries for the entire unexpired portions of their
contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the subject
clause, illegally dismissed OFWs with an unexpired portion of one year or more in their
employment contract have since been differently treated in that their money claims are
subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-
term employment.
The Court concludes that the subject clause contains a suspect classification in that,
in the computation of the monetary benefits of fixed-term employees who are
illegally discharged, it imposes a 3-month cap on the claim of OFWs with an
unexpired portion of one year or more in their contracts, but none on the claims of
other OFWs or local workers with fixed-term employment. The subject clause
singles out one classification of OFWs and burdens it with a peculiar disadvantage.
There being a suspect classification involving a vulnerable sector protected by the
Constitution, the Court now subjects the classification to a strict judicial scrutiny, and
determines whether it serves a compelling state interest through the least restrictive means.
What constitutes compelling state interest is measured by the scale of rights and powers
arrayed in the Constitution and calibrated by history.124 It is akin to the paramount interest
of the state125 for which some individual liberties must give way, such as the public interest
in safeguarding health or maintaining medical standards,126 or in maintaining access to
information on matters of public concern.127
In the present case, the Court dug deep into the records but found no compelling state interest
that the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure "designed to protect the
employment of Filipino seafarers overseas x x x. By limiting the liability to three months [sic],
Filipino seafarers have better chance of getting hired by foreign employers." The limitation
also protects the interest of local placement agencies, which otherwise may be made to
shoulder millions of pesos in "termination pay."128
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the payment of money
claims in the event that jurisdiction over the foreign employer is not acquired by the court or
if the foreign employer reneges on its obligation. Hence, placement agencies that are in good
faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign
employer. To protect them and to promote their continued helpful contribution in deploying
Filipino migrant workers, liability for money are reduced under Section 10 of RA 8042.
24
This measure redounds to the benefit of the migrant workers whose welfare the government
seeks to promote. The survival of legitimate placement agencies helps [assure] the
government that migrant workers are properly deployed and are employed under decent and
humane conditions.129 (Emphasis supplied)
However, nowhere in the Comment or Memorandum does the OSG cite the source of its
perception of the state interest sought to be served by the subject clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in
sponsorship of House Bill No. 14314 (HB 14314), from which the law originated; 130 but the
speech makes no reference to the underlying reason for the adoption of the subject clause.
That is only natural for none of the 29 provisions in HB 14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims, to
wit:
Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of
the complaint, the claims arising out of an employer-employee relationship or by virtue of the
complaint, the claim arising out of an employer-employee relationship or by virtue of any law
or contract involving Filipino workers for overseas employment including claims for actual,
moral, exemplary and other forms of damages.
The liability of the principal and the recruitment/placement agency or any and all claims under
this Section shall be joint and several.
Any compromise/amicable settlement or voluntary agreement on any money claims exclusive
of damages under this Section shall not be less than fifty percent (50%) of such money
claims: Provided, That any installment payments, if applicable, to satisfy any such
compromise or voluntary settlement shall not be more than two (2) months. Any
compromise/voluntary agreement in violation of this paragraph shall be null and void.
Non-compliance with the mandatory period for resolutions of cases provided under this
Section shall subject the responsible officials to any or all of the following penalties:
(1) The salary of any such official who fails to render his decision or resolution within
the prescribed period shall be, or caused to be, withheld until the said official complies
therewith;
(2) Suspension for not more than ninety (90) days; or
(3) Dismissal from the service with disqualification to hold any appointive public office
for five (5) years.
Provided, however, That the penalties herein provided shall be without prejudice to any
liability which any such official may have incurred under other existing laws or rules and
regulations as a consequence of violating the provisions of this paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of
money claims.
A rule on the computation of money claims containing the subject clause was inserted and
eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The Court examined
the rationale of the subject clause in the transcripts of the "Bicameral Conference Committee
(Conference Committee) Meetings on the Magna Carta on OCWs (Disagreeing Provisions of
Senate Bill No. 2077 and House Bill No. 14314)." However, the Court finds no discernible
state interest, let alone a compelling one, that is sought to be protected or advanced by the
adoption of the subject clause.
In fine, the Government has failed to discharge its burden of proving the existence of a
compelling state interest that would justify the perpetuation of the discrimination against
OFWs under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the
employment of OFWs by mitigating the solidary liability of placement agencies, such callous
and cavalier rationale will have to be rejected. There can never be a justification for any form
of government action that alleviates the burden of one sector, but imposes the same burden
on another sector, especially when the favored sector is composed of private businesses such
as placement agencies, while the disadvantaged sector is composed of OFWs whose protection
no less than the Constitution commands. The idea that private business interest can be
elevated to the level of a compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of
placement agencies vis-a-vis their foreign principals, there are mechanisms already in place
that can be employed to achieve that purpose without infringing on the constitutional rights
of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based
Overseas Workers, dated February 4, 2002, imposes administrative disciplinary measures on
erring foreign employers who default on their contractual obligations to migrant workers
and/or their Philippine agents. These disciplinary measures range from temporary
disqualification to preventive suspension. The POEA Rules and Regulations Governing the
Recruitment and Employment of Seafarers, dated May 23, 2003, contains similar
administrative disciplinary measures against erring foreign employers.
25
Resort to these administrative measures is undoubtedly the less restrictive means of aiding
local placement agencies in enforcing the solidary liability of their foreign principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of
the right of petitioner and other OFWs to equal protection.1avvphi1
Further, there would be certain misgivings if one is to approach the declaration of the
unconstitutionality of the subject clause from the lone perspective that the clause directly
violates state policy on labor under Section 3,131 Article XIII of the Constitution.
While all the provisions of the 1987 Constitution are presumed self-executing,132 there are
some which this Court has declared not judicially enforceable, Article XIII being one,133
particularly Section 3 thereof, the nature of which, this Court, in Agabon v. National Labor
Relations Commission,134 has described to be not self-actuating:
Thus, the constitutional mandates of protection to labor and security of tenure may be deemed
as self-executing in the sense that these are automatically acknowledged and observed
without need for any enabling legislation. However, to declare that the constitutional
provisions are enough to guarantee the full exercise of the rights embodied therein, and the
realization of ideals therein expressed, would be impractical, if not unrealistic. The espousal
of such view presents the dangerous tendency of being overbroad and exaggerated. The
guarantees of "full protection to labor" and "security of tenure", when examined in isolation,
are facially unqualified, and the broadest interpretation possible suggests a blanket shield in
favor of labor against any form of removal regardless of circumstance. This interpretation
implies an unimpeachable right to continued employment-a utopian notion, doubtless-but still
hardly within the contemplation of the framers. Subsequent legislation is still needed to define
the parameters of these guaranteed rights to ensure the protection and promotion, not only
the rights of the labor sector, but of the employers' as well. Without specific and pertinent
legislation, judicial bodies will be at a loss, formulating their own conclusion to approximate
at least the aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a
positive enforceable right to stave off the dismissal of an employee for just cause owing
to the failure to serve proper notice or hearing. As manifested by several framers of the 1987
Constitution, the provisions on social justice require legislative enactments for their
enforceability.135 (Emphasis added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable
rights, for the violation of which the questioned clause may be declared unconstitutional. It
may unwittingly risk opening the floodgates of litigation to every worker or union over every
conceivable violation of so broad a concept as social justice for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the working class
any actual enforceable right, but merely clothes it with the status of a sector for whom the
Constitution urges protection through executive or legislative action and judicial
recognition. Its utility is best limited to being an impetus not just for the executive and
legislative departments, but for the judiciary as well, to protect the welfare of the working
class. And it was in fact consistent with that constitutional agenda that the Court in Central
Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng
Pilipinas, penned by then Associate Justice now Chief Justice Reynato S. Puno, formulated the
judicial precept that when the challenge to a statute is premised on the perpetuation of
prejudice against persons favored by the Constitution with special protection -- such as the
working class or a section thereof -- the Court may recognize the existence of a suspect
classification and subject the same to strict judicial scrutiny.
The view that the concepts of suspect classification and strict judicial scrutiny formulated in
Central Bank Employee Association exaggerate the significance of Section 3, Article XIII is a
groundless apprehension. Central Bank applied Article XIII in conjunction with the equal
protection clause. Article XIII, by itself, without the application of the equal protection clause,
has no life or force of its own as elucidated in Agabon.
Along the same line of reasoning, the Court further holds that the subject clause violates
petitioner's right to substantive due process, for it deprives him of property, consisting of
monetary benefits, without any existing valid governmental purpose. 136
The argument of the Solicitor General, that the actual purpose of the subject clause of limiting
the entitlement of OFWs to their three-month salary in case of illegal dismissal, is to give
them a better chance of getting hired by foreign employers. This is plain speculation. As earlier
discussed, there is nothing in the text of the law or the records of the deliberations leading to
its enactment or the pleadings of respondent that would indicate that there is an existing
governmental purpose for the subject clause, or even just a pretext of one.
The subject clause does not state or imply any definitive governmental purpose; and it is for
that precise reason that the clause violates not just petitioner's right to equal protection, but
also her right to substantive due process under Section 1,137 Article III of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire
unexpired period of nine months and 23 days of his employment contract, pursuant to law
and jurisprudence prior to the enactment of R.A. No. 8042.
On the Third Issue
Petitioner contends that his overtime and leave pay should form part of the salary basis in
the computation of his monetary award, because these are fixed benefits that have been
stipulated into his contract.
Petitioner is mistaken.
26
The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like
petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment
Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime,
leave pay and other bonuses; whereas overtime pay is compensation for all work "performed"
in excess of the regular eight hours, and holiday pay is compensation for any work
"performed" on designated rest days and holidays.
By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and
holiday pay in the computation of petitioner's monetary award, unless there is evidence that
he performed work during those periods. As the Court held in Centennial Transmarine, Inc.
v. Dela Cruz,138
However, the payment of overtime pay and leave pay should be disallowed in light of our
ruling in Cagampan v. National Labor Relations Commission, to wit:
The rendition of overtime work and the submission of sufficient proof that said was actually
performed are conditions to be satisfied before a seaman could be entitled to overtime pay
which should be computed on the basis of 30% of the basic monthly salary. In short, the
contract provision guarantees the right to overtime pay but the entitlement to such benefit
must first be established.
In the same vein, the claim for the day's leave pay for the unexpired portion of the contract
is unwarranted since the same is given during the actual service of the seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months for
every year of the unexpired term, whichever is less" in the 5th paragraph of Section 10 of
Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL; and the December 8, 2004
Decision and April 1, 2005 Resolution of the Court of Appeals are MODIFIED to the effect
that petitioner is AWARDED his salaries for the entire unexpired portion of his employment
contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per
month.
No costs.
SO ORDERED.
G.R. No. 147572 February 19, 2003
TEODORICO ROSARIO, petitioner,
vs.
VICTORY RICEMILL, respondent.
DECISION
CALLEJO, J.:
Petitioner Teodorico Rosario filed the instant petition for review on certiorari seeking to
reverse and set aside the Decision1 dated September 22, 2000 and Resolution2 dated March
16, 2001 of the Court of Appeals in CA-G.R. SP No. 52487. In the assailed decision, the
appellate court affirmed the decision of the National Labor Relations Commission (NLRC)
declaring petitioner’s dismissal from employment valid. The assailed resolution denied
petitioner’s motion for reconsideration.
The case stemmed from a complaint for illegal dismissal with money claims (separation pay,
overtime pay, 13th month pay and incentive pay) filed by petitioner against respondent
Victory Ricemill, a single proprietorship owned by Emilio Uy. The antecedent facts, as culled
from the records of the case are, as follows:
Emilio Uy was engaged in the business of milling palay under the business name Victory
Ricemill. He employed petitioner as truck driver from January 11, 1982 up to his dismissal on
June 22, 1993. Petitioner was paid the wage rate of ₱110.00 per day. As truck driver,
petitioner was tasked to, among others, haul palay from various points in Isabela and Cagayan
and bring them to respondent’s ricemill in Cabatuan, Isabela. In addition, petitioner acted as
personal driver to the family of Mr. Uy during their trips to Manila.
On June 22, 1993, respondent terminated petitioner’s employment for his notorious acts of
insubordination and that he attempted to kill a fellow employee. According to respondent,
petitioner was guilty of insubordination when he refused to serve as driver of Mr. Uy’s son
when the latter needed a driver. Further, on one occasion, petitioner was instructed to deliver
600 bags of cement to the Felix Hardware in Tuguegarao. Instead of bringing the merchandise
to the said store, petitioner delivered the same to one Eduardo Interior, who had not since
then paid for it to the damage of respondent in the total sum of ₱60,000.00. Because of
petitioner’s tendency to disobey the orders to him, respondent was constrained to engage the
services of another driver in the person of Michael Ng. Petitioner resented the new driver and
became uncooperative, disrespectful and quarrelsome. On June 21, 1993, petitioner, armed
with a dagger, fought with Michael Ng and inflicted an injury on the latter. Petitioner likewise
inflicted injuries on the head of Rody Senias, a co-employee, when he intervened in the fight
and tried to pacify petitioner.
After the proceedings, the regional labor arbiter rendered his decision3 dismissing for lack of
merit the complaint for illegal dismissal. The regional labor arbiter found that there were valid
causes, i.e., willful disobedience to the lawful orders of the employer and commission of a
crime or offense against the employer’s duly authorized representative, for the termination
of petitioner’s employment.
On appeal, the NLRC ordered the remand of the case to the regional labor arbiter for further
proceedings.4 The NLRC found that petitioner was denied due process during the proceedings
with the regional labor arbiter as he (petitioner) was not given the opportunity to present his
27
additional rebuttal evidence. On the other hand, respondent was allowed to submit in evidence
various exhibits to discredit the rebuttal testimony of petitioner.
During the subsequent proceedings before the regional labor arbiter, petitioner submitted the
affidavit of Mario Roque. Roque averred that contrary to respondent’s claim, the 600 bags of
cement delivered to Eduardo Interior had been paid as evidenced by DBP Check No. B-
065462, dated May 22, 1993, in the sum of ₱58,950.00 payable to respondent.
Thereafter, the regional labor arbiter promulgated his decision5 stating that he found no
reason to deviate from his previous decision. Roque’s testimony was not given any probative
value as the same was found to be hearsay. The regional labor arbiter concluded that
respondent was justified in terminating the employment of petitioner on ground of loss of
confidence. Accordingly, the regional labor arbiter again dismissed, for lack of merit,
petitioner’s complaint for illegal dismissal.
On appeal, the NLRC affirmed the ruling of the regional labor arbiter and declared that
petitioner’s dismissal was valid.
Petitioner then elevated the case to the CA which rendered the assailed decision.6 The
appellate court accorded respect to the findings of the NLRC. It declared that petitioner’s act
of delivering the merchandise to Edgardo Interior, instead of Felix Hardware, without being
authorized to do so by respondent was not only inimical to the latter’s business interests, but
constitutive of insubordination or willful disobedience as well. The CA likewise held that
petitioner’s act of fomenting a fight with a co-worker constituted serious misconduct. It further
noted that petitioner’s contumacious refusal to obey the reasonable orders of respondent was
not sufficiently explained. The CA thus found that respondent had justifiable cause to dismiss
petitioner.
Anent the procedural aspect, the CA observed that although there was no strict compliance
with the two-notice rule, it could be gleaned from the records that petitioner was given ample
opportunity to explain his side. Moreover, even granting that respondent fell short of the two-
notice requirement, such irregularity, according to the CA, does not militate against the
legality of the dismissal.7
The dispositive portion of the assailed CA decision reads:
WHEREFORE, premises considered, the decision, dated August 24, 1998, of the National Labor
Relations Commission in NLRC NCR CA 0008213-95 (NLRC RAB-II-CN-07-00262-93) is
hereby AFFIRMED. Costs against the petitioner.8
Petitioner filed a motion for reconsideration of the aforesaid decision but the CA denied the
same in the assailed resolution. Aggrieved, petitioner filed with this Court the instant petition
on the ground that:
THE HONORABLE COURT OF APPEALS, WITH ALL DUE RESPECT, COMMITTED A REVERSIBLE
ERROR WHEN IT AFFIRMED THE QUESTIONED DECISION OF THE PUBLIC RESPONDENT
NATIONAL LABOR RELATIONS COMMISSION NOTWITHSTANDING THE FACT THAT
PETITIONER WAS ILLEGALLY DISMISSED. THE HONORABLE COURT OF APPEALS LIKEWISE
ERRED IN NOT SUSTAINING PETITIONER’S STANCE THAT HIS DISMISSAL FROM HIS
EMPLOYMENT WAS NOT IN ACCORDANCE WITH THE DUE PROCESS REQUIREMENT OF THE
LAW. AND AS A CONSEQUENCE OF PETITIONER’S ILLEGAL DISMISSAL, HE IS ENTITLED TO
SEPARATION PAY, OVERTIME PAY, INCENTIVE LEAVE PAY, HOLIDAY PAY AND OTHER
BENEFITS GRANTED BY LAW. IN SO DOING, THE HONORABLE COURT OF APPEALS RENDERED
A DECISION WHICH IS CONTRARY TO THE FACTS OF THE CASE, THE EVIDENCE, LAW AND
ESTABLISHED JURISPRUDENCE. THESE MANIFEST AND GLARING ERRORS, IF NOT
CORRECTED, WOULD INEVITABLY WORK INJUSTICE TO HEREIN PETITIONER AND MAKE HIM
SUFFER IRREPARABLE DAMAGE.9
Petitioner presented the following issues for the Court’s resolution:
I
WHETHER OR NOT PETITIONER’S TERMINATION WAS FOR A JUST AND LAWFUL CAUSE.
II
WHETHER OR NOT PETITIONER’S DISMISSAL FROM HIS EMPLOYMENT WAS IN ACCORDANCE
WITH THE DUE PROCESS REQUIREMENT OF THE LAW.
III
WHETHER OR NOT PETITIONER IS ENTITLED TO SEPARATION PAY, OVERTIME PAY,
INCENTIVE LEAVE PAY, HOLIDAY PAY AND OTHER BENEFITS GRANTED BY LAW.10
It is the contention of petitioner that his act of delivering the 600 bags of cement to Edgardo
Interior, instead of the Felix Hardware to which they were intended, does not constitute willful
disobedience nor serious misconduct so as to justify his dismissal. He was allegedly
constrained to look for another buyer for the merchandise because the proprietor of Felix
Hardware rejected the aforesaid materials. It has been allegedly company practice for
respondent to allow the delivery of materials to other business establishments when these
are rejected by the intended customers. Contrary to respondent’s claim, Mr. Interior allegedly
paid for the bags of cement as testified to by Roque.
Petitioner maintains that his refusal to serve as driver to Mr. Uy’s son does not constitute
willful disobedience to the employer’s lawful order because it was not work-related. Further,
he could not allegedly be dismissed for committing an offense against his co-worker, Michael
Ng, because he was neither the employer, nor a member of his family nor his duly authorized
representative.
28
Petitioner likewise claims that he was not afforded due process of law because prior to the
termination letter, he was not furnished a written notice detailing the particular acts and/or
omissions which he allegedly committed to warrant his dismissal. Petitioner thus prays that
respondent be directed to reinstate him and pay his money claims.
The regional labor arbiter, the NLRC and the CA are unanimous in finding that there was
justifiable cause for the dismissal of petitioner. They are one in holding that petitioner
committed willful disobedience when he delivered the 600 bags of cement to Mr. Interior,
instead of the Felix Hardware, without respondent’s knowledge nor permission.
The validity of petitioner’s dismissal is a factual question. It is not for the reviewing court to
weigh the conflicting evidence, determine the credibility of witnesses, or otherwise substitute
its own judgment for that of the administrative agency. Well-settled is the rule that findings
of fact of quasi-judicial agencies, like the NLRC, are accorded not only respect but at times
even finality if such findings are supported by substantial evidence.11 This is especially so in
this case, in which the findings of the NLRC were affirmed by the Court of Appeals. The findings
of facts made therein can only be set aside upon showing of grave abuse of discretion, fraud
or error of law.12 None has been shown in this case.
The unanimous finding of the regional labor arbiter, the NLRC and the CA that petitioner is
guilty of willful disobedience is based on substantial evidence on record. Petitioner’s cause is
not helped by the fact that he committed a crime against his co-worker. His actuations clearly
constituted willful disobedience and serious misconduct justifying his dismissal under Article
282(a) of the Labor Code which provides:
Art. 282. Termination by employer. – An employer may terminate an employment for any of
the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
xxx
Willful disobedience of the employer’s lawful orders, as a just cause for the dismissal of an
employee, envisages the concurrence of at least two requisites: (1) the employee’s assailed
conduct must have been willful or intentional, the willfulness being characterized by a
"wrongful and perverse attitude;" and (2) the order violated must have been reasonable,
lawful, made known to the employee and must pertain to the duties which he had been
engaged to discharge.13
In this case, the order to petitioner was simple, i.e., to deliver the merchandise to the Felix
Hardware. It was clearly reasonable, lawful, made known to petitioner and pertained to his
duty as driver of respondent. Petitioner did not even proffer a justifiable explanation for his
disobedience thereto. Every employee is charged with the implicit duty of caring for the
employer’s property.14 Petitioner’s conduct showed that he could not even be trusted with
this task. Further, his hostile attitude towards his co-workers which eventually led him to
inflict physical injuries on one of them cannot be countenanced. As correctly put by the NLRC,
petitioner’s "continuance in the service of respondent company is partly inimical not only to
its interests but also to the interest of its other employees."15
To effect the dismissal of an employee, however, the law requires not only that there be just
and valid cause as provided under Article 282 of the Labor Code. It likewise enjoins the
employer to afford the employee the opportunity to be heard and to defend himself. On the
latter aspect, the employer is mandated to furnish the employee with two (2) written notices:
(a) a written notice containing a statement of the cause for the termination to afford the
employee ample opportunity to be heard and defend himself with the assistance of his
representative, if he so desires; (b) if the employer decides to terminate the services of the
employee, the employer must notify him in writing of the decision to dismiss him, stating
clearly the reason therefor.16
While there was unanimity among the regional labor arbiter, the NLRC and the CA on the
existence of a valid and lawful cause for petitioner’s dismissal, the same could not be said on
their respective findings on whether or not respondent complied with the procedural
requirements in effecting petitioner’s dismissal, i.e., affording him the opportunity to be
heard. The regional labor arbiter and the NLRC did not make any finding on whether
respondent afforded petitioner the opportunity to be heard and to defend himself. On the
other hand, as mentioned earlier, the CA found that petitioner was given ample opportunity
to explain his side. Even granting that there was no strict compliance with the two-notice
requirement, such irregularity, according to the CA, does not militate against the legality of
the dismissal citing Serrano vs. NLRC.17
A careful review of the records revealed that, indeed, respondent’s manner of dismissing
petitioner fell short of the two-notice requirement. While it furnished petitioner the written
notice informing him of his dismissal,18 respondent failed to furnish petitioner the written
notice apprising him of the charge or charges against him. Consequently, petitioner was
deprived of the opportunity to respond thereto.
However, as correctly opined by the CA, respondent’s omission does not render petitioner’s
dismissal invalid but merely ineffectual. The prevailing rule is that when the dismissal is
effected for a just and valid cause, as in this case, the failure to observe procedural
requirements does not invalidate nor nullify the dismissal of an employee. The Court had the
occasion to expound this rule in the case of Serrano19 in this wise:
Not all notice requirements are requirements of due process. Some are simply part of a
procedure to be followed before a right granted to a party can be exercised. Others are simply
an application of the Justinian precept, embodied in the Civil Code, to act with justice, give
everyone his due, and observe honesty and good faith toward one’s fellowmen. Such is the
notice requirement in Arts. 282-283. The consequence of the failure either of the employer
29
or the employee to live up to this precept is to make him liable in damages, not to render his
act (dismissal or resignation, as the case may be) void. The measure of damages is the
amount of wages the employee should have received were it not for the termination of his
employment without prior notice. If warranted, nominal and moral damages may also be
awarded.
We hold, therefore, that, with respect to Art. 283 of the Labor Code, the employer’s failure to
comply with the notice requirement does not constitute a denial of due process but a mere
failure to observe a procedure for the termination of employment which makes the
termination of employment merely ineffectual. It is similar to the failure to observe the
provisions of Art. 1592, in relation to Art. 1191, of the Civil Code in rescinding a contract for
the sale of immovable property. Under these provisions, while the power of a party to rescind
a contract is implied in reciprocal obligations, nonetheless, in cases involving the sale of
immovable property, the vendor cannot exercise this power even though the vendee defaults
in the payment of the price, except by bringing an action in court or giving notice of rescission
by means of a notarial demand. Consequently, a notice of rescission given in the letter of an
attorney has no legal effect, and the vendee can make payment even after the due date since
no valid notice of rescission has been given.
Indeed, under the Labor Code, only the absence of a just cause for the termination of
employment can make the dismissal of an employee illegal. This is clear from Art. 279 which
provides:
Security of Tenure. – In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee
who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement.
Thus, only if the termination of employment is not for any of the causes provided by law is it
illegal and, therefore, the employee should be reinstated and paid backwages. x x x.20
(Citations omitted)
In so ruling, the Court recognized that "the law, in protecting the rights of labor, authorized
neither the oppression nor self-destruction of the employer," thus:
The refusal to look beyond the validity of the initial action taken by the employer to terminate
employment either for an authorized or just cause can result in an injustice to the employer.
For not giving notice and hearing before dismissing an employee, who is otherwise guilty of,
say, theft, or even of an attempt against the life of the employer, an employer will be forced
to keep in his employ such guilty employee. This is unjust.
It is true the Constitution regards labor as "a primary social economic force." But so does it
declare that it "recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investment. The Constitution bids the State to
"afford full protection to labor." But it is equally true that "the law, in protecting the rights of
the laborer, authorizes neither oppression nor self-destruction of the employer. And it is
oppression to compel the employer to continue in employment one who is guilty or to force
the employer to remain in operation when it is not economically in his interest to do so.
xxx
On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the
employee was dismissed for any of the just causes mentioned in said Art. 282, then, in
accordance with that article, he should not be reinstated. However, he must be paid
backwages from the time his employment was terminated until it is determined that the
termination of employment is for a just cause because the failure to hear him before he is
dismissed renders the termination of his employment without legal effect.21 (Citations
omitted)
In fine, the lack of notice and hearing is considered as being a mere failure to observe a
procedure for the termination of employment which makes the dismissal ineffectual but not
necessarily illegal. The procedural infirmity is then remedied by ordering the payment to the
employee his full backwages from the time of his dismissal until the court finally rules that
the dismissal has been for a valid cause.22
Having established that respondent had just and valid cause to terminate petitioner’s
employment but failed to hear him prior to his dismissal, respondent is obliged to pay
petitioner his backwages computed from the time of his dismissal up to the time the decision
in this case becomes final.
WHEREFORE, the Decision dated September 22, 2000 and Resolution dated March 16, 2001
of the Court of Appeals in CA-G.R. SP No. 52487, are hereby AFFIRMED with MODIFICATION.
Emilio Uy, doing business under the business name Victory Ricemill, is ordered to pay
petitioner full backwages from the time his employment was terminated on June 22, 1993 up
to the time the herein decision becomes final. For this purpose, this case is REMANDED to the
regional labor arbiter for the computation of the backwages due petitioner.
SO ORDERED.
G.R. No. 170139 August 5, 2014
SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner,
vs.
JOY C. CABILES, Respondent.
30
DECISION
LEONEN, J.:
This case involves an overseas Filipino worker with shattered dreams. It is our duty, given
the facts and the law, to approximate justice for her.
We are asked to decide a petition for review1 on certiorari assailing the Court of Appeals’
decision2 dated June 27, 2005. This decision partially affirmed the National Labor
RelationsCommission’s resolution dated March 31, 2004,3 declaring respondent’s dismissal
illegal, directing petitioner to pay respondent’s three-month salary equivalent to New Taiwan
Dollar (NT$) 46,080.00, and ordering it to reimburse the NT$3,000.00 withheld from
respondent, and pay her NT$300.00 attorney’s fees.4
Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement
agency.5 Responding to an ad it published, respondent, Joy C. Cabiles, submitted her
application for a quality control job in Taiwan.6
Joy’s application was accepted.7 Joy was later asked to sign a oneyear employment contract
for a monthly salary of NT$15,360.00.8 She alleged that Sameer Overseas Agency required
her to pay a placement fee of ₱70,000.00 when she signed the employment contract.9
Joy was deployed to work for TaiwanWacoal, Co. Ltd. (Wacoal) on June 26, 1997.10 She
alleged that in her employment contract, she agreed to work as quality control for one year.11
In Taiwan, she was asked to work as a cutter.12
Sameer Overseas Placement Agencyclaims that on July 14, 1997, a certain Mr. Huwang from
Wacoal informedJoy, without prior notice, that she was terminated and that "she should
immediately report to their office to get her salary and passport."13 She was asked to
"prepare for immediate repatriation."14
Joy claims that she was told that from June 26 to July 14, 1997, she only earned a total of
NT$9,000.15 According to her, Wacoal deducted NT$3,000 to cover her plane ticket to
Manila.16
On October 15, 1997, Joy filed a complaint17 with the National Labor Relations Commission
against petitioner and Wacoal. She claimed that she was illegally dismissed.18 She asked for
the return of her placement fee, the withheld amount for repatriation costs, payment of her
salary for 23 months as well as moral and exemplary damages.19 She identified Wacoal as
Sameer Overseas Placement Agency’s foreign principal.20
Sameer Overseas Placement Agency alleged that respondent's termination was due to her
inefficiency, negligence in her duties, and her "failure to comply with the work requirements
[of] her foreign [employer]."21 The agency also claimed that it did not ask for a placement
fee of ₱70,000.00.22 As evidence, it showedOfficial Receipt No. 14860 dated June 10, 1997,
bearing the amount of ₱20,360.00.23 Petitioner added that Wacoal's accreditation with
petitioner had already been transferred to the Pacific Manpower & Management Services, Inc.
(Pacific) as of August 6, 1997.24 Thus, petitioner asserts that it was already substituted by
Pacific Manpower.25
Pacific Manpower moved for the dismissal of petitioner’s claims against it.26 It alleged that
there was no employer-employee relationship between them.27 Therefore, the claims against
it were outside the jurisdiction of the Labor Arbiter.28 Pacific Manpower argued that the
employment contract should first be presented so that the employer’s contractual obligations
might be identified.29 It further denied that it assumed liability for petitioner’s illegal acts.30
On July 29, 1998, the Labor Arbiter dismissed Joy’s complaint.31 Acting Executive Labor
Arbiter Pedro C.Ramos ruled that her complaint was based on mereallegations.32 The Labor
Arbiter found that there was no excess payment of placement fees, based on the official
receipt presented by petitioner.33 The Labor Arbiter found unnecessary a discussion on
petitioner’s transfer of obligations to Pacific34 and considered the matter immaterial in view
of the dismissal of respondent’s complaint.35
Joy appealed36 to the National Labor Relations Commission.
In a resolution37 dated March 31, 2004, the National Labor Relations Commission declared
that Joy was illegally dismissed.38 It reiterated the doctrine that the burden of proof to show
that the dismissal was based on a just or valid cause belongs to the employer.39 It found that
Sameer Overseas Placement Agency failed to prove that there were just causes for
termination.40 There was no sufficient proofto show that respondent was inefficient in her
work and that she failed to comply with company requirements.41 Furthermore, procedural
dueprocess was not observed in terminating respondent.42
The National Labor Relations Commission did not rule on the issue of reimbursement of
placement fees for lack of jurisdiction.43 It refused to entertain the issue of the alleged
transfer of obligations to Pacific.44 It did not acquire jurisdiction over that issue because
Sameer Overseas Placement Agency failed to appeal the Labor Arbiter’s decision not to rule
on the matter.45
The National Labor Relations Commission awarded respondent only three (3) months worth
of salaryin the amount of NT$46,080, the reimbursement of the NT$3,000 withheld from her,
and attorney’s fees of NT$300.46
The Commission denied the agency’s motion for reconsideration47 dated May 12, 2004
through a resolution48 dated July 2, 2004.
31
Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a petition49
for certiorari with the Court of Appeals assailing the National Labor Relations Commission’s
resolutions dated March 31, 2004 and July 2, 2004.
The Court of Appeals50 affirmed the decision of the National Labor Relations Commission with
respect to the finding of illegal dismissal, Joy’s entitlement to the equivalent of three months
worth of salary, reimbursement of withheld repatriation expense, and attorney’s fees.51 The
Court of Appeals remanded the case to the National Labor Relations Commission to address
the validity of petitioner's allegations against Pacific.52 The Court of Appeals held, thus:
Although the public respondent found the dismissal of the complainant-respondent illegal, we
should point out that the NLRC merely awarded her three (3) months backwages or the
amount of NT$46,080.00, which was based upon its finding that she was dismissed without
due process, a finding that we uphold, given petitioner’s lack of worthwhile discussion upon
the same in the proceedings below or before us. Likewise we sustain NLRC’s finding in regard
to the reimbursement of her fare, which is squarely based on the law; as well as the award
of attorney’s fees.
But we do find it necessary to remand the instant case to the public respondent for further
proceedings, for the purpose of addressing the validity or propriety of petitioner’s third-party
complaint against the transferee agent or the Pacific Manpower & Management Services, Inc.
and Lea G. Manabat. We should emphasize that as far as the decision of the NLRC on the
claims of Joy Cabiles, is concerned, the same is hereby affirmed with finality, and we hold
petitioner liable thereon, but without prejudice to further hearings on its third party complaint
against Pacific for reimbursement.
WHEREFORE, premises considered, the assailed Resolutions are hereby partly AFFIRMED in
accordance with the foregoing discussion, but subject to the caveat embodied inthe last
sentence. No costs.
SO ORDERED.53
Dissatisfied, Sameer Overseas Placement Agency filed this petition.54
We are asked to determine whether the Court of Appeals erred when it affirmed the ruling of
the National Labor Relations Commission finding respondent illegally dismissed and awarding
her three months’ worth of salary, the reimbursement of the cost ofher repatriation, and
attorney’s fees despite the alleged existence of just causes of termination.
Petitioner reiterates that there was just cause for termination because there was a finding of
Wacoal that respondent was inefficient in her work.55
Therefore, it claims that respondent’s dismissal was valid.56
Petitioner also reiterates that since Wacoal’s accreditation was validly transferred to Pacific at
the time respondent filed her complaint, it should be Pacific that should now assume
responsibility for Wacoal’s contractual obligations to the workers originally recruited by
petitioner.57
Sameer Overseas Placement Agency’spetition is without merit. We find for respondent.
I
Sameer Overseas Placement Agency failed to show that there was just cause for causing Joy’s
dismissal. The employer, Wacoal, also failed to accord her due process of law.
Indeed, employers have the prerogative to impose productivity and quality standards at
work.58 They may also impose reasonable rules to ensure that the employees comply with
these standards.59 Failure to comply may be a just cause for their dismissal.60 Certainly,
employers cannot be compelled to retain the services of anemployee who is guilty of acts that
are inimical to the interest of the employer.61 While the law acknowledges the plight and
vulnerability of workers, it does not "authorize the oppression or self-destruction of the
employer."62 Management prerogative is recognized in law and in our jurisprudence.
This prerogative, however, should not be abused. It is "tempered with the employee’s right
to security of tenure."63 Workers are entitled to substantive and procedural due process
before termination. They may not be removed from employment without a validor just cause
as determined by law and without going through the proper procedure.
Security of tenure for labor is guaranteed by our Constitution.64
Employees are not stripped of their security of tenure when they move to work in a different
jurisdiction. With respect to the rights of overseas Filipino workers, we follow the principle of
lex loci contractus.Thus, in Triple Eight Integrated Services, Inc. v. NLRC,65 this court noted:
Petitioner likewise attempts to sidestep the medical certificate requirement by contending that
since Osdana was working in Saudi Arabia, her employment was subject to the laws of the
host country. Apparently, petitioner hopes tomake it appear that the labor laws of Saudi
Arabia do not require any certification by a competent public health authority in the dismissal
of employees due to illness.
Again, petitioner’s argument is without merit.
First, established is the rule that lex loci contractus (the law of the place where the contract
is made) governs in this jurisdiction. There is no question that the contract of employment in
this case was perfected here in the Philippines. Therefore, the Labor Code, its implementing
rules and regulations, and other laws affecting labor apply in this case.Furthermore, settled
32
is the rule that the courts of the forum will not enforce any foreign claim obnoxious to the
forum’s public policy. Herein the Philippines, employment agreements are more than
contractual in nature. The Constitution itself, in Article XIII, Section 3, guarantees the special
protection of workers, to wit:
The State shall afford full protection to labor, local and overseas, organized and unorganized,
and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to selforganization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with
law. They shall be entitled to security of tenure, humane conditions of work, and a living
wage. Theyshall also participate in policy and decision-making processes affecting their rights
and benefits as may be provided by law.
....
This public policy should be borne in mind in this case because to allow foreign employers to
determine for and by themselves whether an overseas contract worker may be dismissed on
the ground of illness would encourage illegal or arbitrary pretermination of employment
contracts.66 (Emphasis supplied, citation omitted)
Even with respect to fundamental procedural rights, this court emphasized in PCL Shipping
Philippines, Inc. v. NLRC,67 to wit:
Petitioners admit that they did notinform private respondent in writing of the charges against
him and that they failed to conduct a formal investigation to give him opportunity to air his
side. However, petitioners contend that the twin requirements ofnotice and hearing applies
strictly only when the employment is within the Philippines and that these need not be strictly
observed in cases of international maritime or overseas employment.
The Court does not agree. The provisions of the Constitution as well as the Labor Code which
afford protection to labor apply to Filipino employees whether working within the Philippines
or abroad. Moreover, the principle of lex loci contractus (the law of the place where the
contract is made) governs in this jurisdiction. In the present case, it is not disputed that the
Contract of Employment entered into by and between petitioners and private respondent was
executed here in the Philippines with the approval of the Philippine Overseas Employment
Administration (POEA). Hence, the Labor Code together with its implementing rules and
regulations and other laws affecting labor apply in this case.68 (Emphasis supplied, citations
omitted)
By our laws, overseas Filipino workers (OFWs) may only be terminated for a just or authorized
cause and after compliance with procedural due process requirements.
Article 282 of the Labor Code enumerates the just causes of termination by the employer.
Thus:
Art. 282. Termination by employer. An employer may terminate an employment for any of
the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representatives; and
(e) Other causes analogous to the foregoing.
Petitioner’s allegation that respondentwas inefficient in her work and negligent in her duties69
may, therefore, constitute a just cause for termination under Article 282(b), but only if
petitioner was able to prove it.
The burden of proving that there is just cause for termination is on the employer. "The
employer must affirmatively show rationally adequate evidence that the dismissal was for a
justifiable cause."70 Failure to show that there was valid or just cause for termination would
necessarily mean that the dismissal was illegal.71
To show that dismissal resulting from inefficiency in work is valid, it must be shown that: 1)
the employer has set standards of conduct and workmanship against which the employee will
be judged; 2) the standards of conduct and workmanship must have been communicated
tothe employee; and 3) the communication was made at a reasonable time prior to the
employee’s performance assessment.
This is similar to the law and jurisprudence on probationary employees, which allow
termination ofthe employee only when there is "just cause or when [the probationary
employee] fails to qualify as a regular employee in accordance with reasonable standards
made known by the employer to the employee at the time of his [or her] engagement."72
However, we do not see why the application of that ruling should be limited to probationary
employment. That rule is basic to the idea of security of tenure and due process, which are
guaranteed to all employees, whether their employment is probationary or regular.
33
The pre-determined standards that the employer sets are the bases for determining the
probationary employee’s fitness, propriety, efficiency, and qualifications as a regular
employee. Due process requires that the probationary employee be informed of such
standards at the time of his or her engagement so he or she can adjusthis or her character
or workmanship accordingly. Proper adjustment to fit the standards upon which the
employee’s qualifications will be evaluated will increase one’s chances of being positively
assessed for regularization by his or her employer.
Assessing an employee’s work performance does not stop after regularization. The employer,
on a regular basis, determines if an employee is still qualified and efficient, based on work
standards. Based on that determination, and after complying with the due process
requirements of notice and hearing, the employer may exercise its management prerogative
of terminating the employee found unqualified.
The regular employee must constantlyattempt to prove to his or her employer that he or she
meets all the standards for employment. This time, however, the standards to be met are set
for the purpose of retaining employment or promotion. The employee cannot be expected to
meet any standard of character or workmanship if such standards were not communicated to
him or her. Courts should remain vigilant on allegations of the employer’s failure to
communicatework standards that would govern one’s employment "if [these are] to discharge
in good faith [their] duty to adjudicate."73
In this case, petitioner merely alleged that respondent failed to comply with her foreign
employer’s work requirements and was inefficient in her work.74 No evidence was shown to
support such allegations. Petitioner did not even bother to specify what requirements were
not met, what efficiency standards were violated, or what particular acts of respondent
constituted inefficiency.
There was also no showing that respondent was sufficiently informed of the standards against
which her work efficiency and performance were judged. The parties’ conflict as to the position
held by respondent showed that even the matter as basic as the job title was not clear.
The bare allegations of petitioner are not sufficient to support a claim that there is just cause
for termination. There is no proof that respondent was legally terminated.
Petitioner failed to comply with
the due process requirements
Respondent’s dismissal less than one year from hiring and her repatriation on the same day
show not onlyfailure on the partof petitioner to comply with the requirement of the existence
of just cause for termination. They patently show that the employersdid not comply with the
due process requirement.
A valid dismissal requires both a valid cause and adherence to the valid procedure of
dismissal.75 The employer is required to give the charged employee at least two written
notices before termination.76 One of the written notices must inform the employee of the
particular acts that may cause his or her dismissal.77 The other notice must "[inform] the
employee of the employer’s decision."78 Aside from the notice requirement, the employee
must also be given "an opportunity to be heard."79
Petitioner failed to comply with the twin notices and hearing requirements. Respondent
started working on June 26, 1997. She was told that she was terminated on July 14, 1997
effective on the same day and barely a month from her first workday. She was also repatriated
on the same day that she was informed of her termination. The abruptness of the termination
negated any finding that she was properly notified and given the opportunity to be heard. Her
constitutional right to due process of law was violated.
II
Respondent Joy Cabiles, having been illegally dismissed, is entitled to her salary for the
unexpired portion ofthe employment contract that was violated together with attorney’s fees
and reimbursement of amounts withheld from her salary.
Section 10 of Republic Act No. 8042,otherwise known as the Migrant Workers and Overseas
Filipinos Act of1995, states thatoverseas workers who were terminated without just, valid, or
authorized cause "shall be entitled to the full reimbursement of his placement fee with interest
of twelve (12%) per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is less."
Sec. 10. MONEY CLAIMS. – Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after filing of the
complaint, the claims arising out of an employer-employee relationship or by virtue of any
law or contract involving Filipino workers for overseas deployment including claims for actual,
moral, exemplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement agency for any and all
claims under this section shall be joint and several. This provisions [sic] shall be incorporated
in the contract for overseas employment and shall be a condition precedent for its approval.
The performance bond to be filed by the recruitment/placementagency, as provided by law,
shall be answerable for all money claims or damages that may be awarded to the workers. If
the recruitment/placement agency is a juridical being, the corporate officers and directors
and partners as the case may be, shall themselves be jointly and solidarily liable with the
corporation orpartnership for the aforesaid claims and damages.
34
Such liabilities shall continue during the entire period or duration of the employment contract
and shall not be affected by any substitution, amendment or modification made locally or in
a foreign country of the said contract.
Any compromise/amicable settlement or voluntary agreement on money claims inclusive of
damages under this section shall be paid within four (4) months from the approval of the
settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or authorized cause as
defined by law or contract, the workers shall be entitled to the full reimbursement of his
placement fee with interest of twelve (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every year of the unexpired
term, whichever is less.
....
(Emphasis supplied)
Section 15 of Republic Act No. 8042 states that "repatriation of the worker and the transport
of his [or her] personal belongings shall be the primary responsibility of the agency which
recruited or deployed the worker overseas." The exception is when "termination of
employment is due solely to the fault of the worker,"80 which as we have established, is not
the case. It reads: SEC. 15. REPATRIATION OF WORKERS; EMERGENCY REPATRIATION
FUND. – The repatriation of the worker and the transport of his personal belongings shall be
the primary responsibility of the agency which recruited or deployed the worker overseas. All
costs attendant to repatriation shall be borne by or charged to the agency concerned and/or
its principal. Likewise, the repatriation of remains and transport of the personal belongings of
a deceased worker and all costs attendant thereto shall be borne by the principal and/or local
agency. However, in cases where the termination of employment is due solely to the fault of
the worker, the principal/employer or agency shall not in any manner be responsible for the
repatriation of the former and/or his belongings.
....
The Labor Code81 also entitles the employee to 10% of the amount of withheld wages as
attorney’s feeswhen the withholding is unlawful.
The Court of Appeals affirmedthe National Labor Relations Commission’s decision to award
respondent NT$46,080.00 or the threemonth equivalent of her salary, attorney’s fees of
NT$300.00, and the reimbursement of the withheld NT$3,000.00 salary, which answered for
her repatriation.
We uphold the finding that respondent is entitled to all of these awards. The award of the
three-month equivalent of respondent’s salary should, however, be increased to the amount
equivalent to the unexpired term of the employment contract.
In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc.,82 this court
ruled that the clause "or for three (3) months for every year of the unexpired term, whichever
is less"83 is unconstitutional for violating the equal protection clause and substantive due
process.84
A statute or provision which was declared unconstitutional is not a law. It "confers no rights;
it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has
not been passed at all."85
We are aware that the clause "or for three (3) months for every year of the unexpired term,
whichever is less"was reinstated in Republic Act No. 8042 upon promulgation of Republic Act
No. 10022 in 2010. Section 7 of Republic Act No. 10022 provides:
Section 7.Section 10 of Republic Act No. 8042, as amended, is hereby amended to read as
follows:
SEC. 10. Money Claims.– Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of
the complaint, the claims arising out of an employer-employee relationship or by virtue of
any law or contract involving Filipino workers for overseas deployment including claims for
actual, moral, exemplary and other forms of damage. Consistent with this mandate, the NLRC
shall endeavor to update and keep abreast with the developments in the global services
industry.
The liability of the principal/employer and the recruitment/placement agency for any and all
claims under this section shall be joint and several. This provision shall be incorporated in the
contract for overseas employment and shall be a condition precedent for its approval. The
performance bond to de [sic] filed by the recruitment/placement agency, as provided by law,
shall be answerable for all money claims or damages that may be awarded to the workers. If
the recruitment/placement agency is a juridical being, the corporate officers and directors
and partners as the case may be, shall themselves be jointly and solidarily liable with the
corporation or partnership for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the employment contract
and shall not be affected by any substitution, amendment or modification made locally or in
a foreign country of the said contract.
35
Any compromise/amicable settlement or voluntary agreement on money claims inclusive of
damages under this section shall be paid within thirty (30) days from approval of the
settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or authorized cause as
defined by law or contract, or any unauthorized deductions from the migrant worker’s salary,
the worker shall be entitled to the full reimbursement if [sic] his placement fee and the
deductions made with interest at twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for every year of the
unexpired term, whichever is less.
In case of a final and executory judgement against a foreign employer/principal, it shall be
automatically disqualified, without further proceedings, from participating in the Philippine
Overseas Employment Program and from recruiting and hiring Filipino workers until and
unless it fully satisfies the judgement award.
Noncompliance with the mandatory periods for resolutions of case providedunder this section
shall subject the responsible officials to any or all of the following penalties:
(a) The salary of any such official who fails to render his decision or resolution within
the prescribed period shall be, or caused to be, withheld until the said official complies
therewith;
(b) Suspension for not more than ninety (90) days; or
(c) Dismissal from the service with disqualification to hold any appointive public office
for five (5) years.
Provided, however,That the penalties herein provided shall be without prejudice to any liability
which any such official may have incured [sic] under other existing laws or rules and
regulations as a consequence of violating the provisions of this paragraph. (Emphasis
supplied)
Republic Act No. 10022 was promulgated on March 8, 2010. This means that the
reinstatement of the clause in Republic Act No. 8042 was not yet in effect at the time of
respondent’s termination from work in 1997.86 Republic Act No. 8042 before it was amended
byRepublic Act No. 10022 governs this case.
When a law is passed, this court awaits an actual case that clearly raises adversarial positions
in their proper context before considering a prayer to declare it as unconstitutional.
However, we are confronted with a unique situation. The law passed incorporates the exact
clause already declared as unconstitutional, without any perceived substantial change in the
circumstances.
This may cause confusion on the part of the National Labor Relations Commission and the
Court of Appeals.At minimum, the existence of Republic Act No. 10022 may delay the
execution of the judgment in this case, further frustrating remedies to assuage the wrong
done to petitioner.
Hence, there is a necessity to decide this constitutional issue.
Moreover, this court is possessed with the constitutional duty to "[p]romulgate rules
concerning the protection and enforcement of constitutional rights."87 When cases become
mootand academic, we do not hesitate to provide for guidance to bench and bar in situations
where the same violations are capable of repetition but will evade review. This is analogous
to cases where there are millions of Filipinos working abroad who are bound to suffer from
the lack of protection because of the restoration of an identical clause in a provision previously
declared as unconstitutional.
In the hierarchy of laws, the Constitution is supreme. No branch or office of the government
may exercise its powers in any manner inconsistent with the Constitution, regardless of the
existence of any law that supports such exercise. The Constitution cannot be trumped by any
other law. All laws must be read in light of the Constitution. Any law that is inconsistent with
it is a nullity.
Thus, when a law or a provision of law is null because it is inconsistent with the
Constitution,the nullity cannot be cured by reincorporation or reenactment of the same or a
similar law or provision. A law or provision of law that was already declared unconstitutional
remains as such unless circumstances have sochanged as to warrant a reverse conclusion.
We are not convinced by the pleadings submitted by the parties that the situation has so
changed so as to cause us to reverse binding precedent.
Likewise, there are special reasons of judicial efficiency and economy that attend to these
cases. The new law puts our overseas workers in the same vulnerable position as they were
prior to Serrano. Failure to reiterate the very ratio decidendi of that case will result in the
same untold economic hardships that our reading of the Constitution intended to avoid.
Obviously, we cannot countenance added expenses for further litigation thatwill reduce their
hardearned wages as well as add to the indignity of having been deprived of the protection
of our laws simply because our precedents have not been followed. There is no constitutional
doctrine that causes injustice in the face of empty procedural niceties. Constitutional
interpretation is complex, but it is never unreasonable.
36
Thus, in a resolution88 dated October 22, 2013, we ordered the parties and the Office of the
Solicitor General to comment on the constitutionality of the reinstated clause in Republic Act
No. 10022.
In its comment,89 petitioner argued that the clause was constitutional.90 The legislators
intended a balance between the employers’ and the employees’ rights by not unduly
burdening the local recruitment agency.91 Petitioner is also of the view that the clause was
already declared as constitutional in Serrano.92
The Office of the Solicitor General also argued that the clause was valid and constitutional.93
However, since the parties never raised the issue of the constitutionality of the clause
asreinstated in Republic Act No. 10022, its contention is that it is beyond judicial review.94
On the other hand, respondentargued that the clause was unconstitutional because it
infringed on workers’ right to contract.95
We observe that the reinstated clause, this time as provided in Republic Act. No. 10022,
violates the constitutional rights to equal protection and due process.96 Petitioner as well as
the Solicitor General have failed to show any compelling changein the circumstances that
would warrant us to revisit the precedent.
We reiterate our finding in Serrano v. Gallant Maritime that limiting wages that should be
recovered by anillegally dismissed overseas worker to three months is both a violation of due
process and the equal protection clauses of the Constitution.
Equal protection of the law is a guarantee that persons under like circumstances and falling
within the same class are treated alike, in terms of "privileges conferred and liabilities
enforced."97 It is a guarantee against "undue favor and individual or class privilege, as well
as hostile discrimination or the oppression of inequality."98
In creating laws, the legislature has the power "to make distinctions and classifications."99
In exercising such power, it has a wide discretion.100
The equal protection clause does not infringe on this legislative power.101 A law is void on
this basis, only if classifications are made arbitrarily.102 There is no violation of the equal
protection clause if the law applies equally to persons within the same class and if there are
reasonable grounds for distinguishing between those falling within the class and those who
do not fall within the class.103 A law that does not violate the equal protection clause
prescribesa reasonable classification.104
A reasonable classification "(1) must rest on substantial distinctions; (2) must be germane to
the purposes of the law; (3) must not be limited to existing conditions only; and (4) must
apply equally to all members of the same class."105
The reinstated clause does not satisfy the requirement of reasonable classification.
In Serrano, we identified the classifications made by the reinstated clause. It distinguished
between fixed-period overseas workers and fixedperiod local workers.106 It also distinguished
between overseas workers with employment contracts of less than one year and overseas
workers with employment contracts of at least one year.107 Within the class of overseas
workers with at least one-year employment contracts, there was a distinction between those
with at least a year left in their contracts and those with less than a year left in their contracts
when they were illegally dismissed.108
The Congress’ classification may be subjected to judicial review. In Serrano, there is a
"legislative classification which impermissibly interferes with the exercise of a fundamental
right or operates to the peculiar disadvantage of a suspect class."109
Under the Constitution, labor is afforded special protection.110 Thus, this court in Serrano,
"[i]mbued with the same sense of ‘obligation to afford protection to labor,’ . . . employ[ed]
the standard of strict judicial scrutiny, for it perceive[d] in the subject clause a suspect
classification prejudicial to OFWs."111
We also noted in Serranothat before the passage of Republic Act No. 8042, the money claims
of illegally terminated overseas and local workers with fixed-term employment werecomputed
in the same manner.112 Their money claims were computed based onthe "unexpired portions
of their contracts."113 The adoption of the reinstated clause in Republic Act No. 8042
subjected the money claims of illegally dismissed overseas workers with an unexpired term
of at least a year to a cap of three months worth of their salary.114 There was no such
limitation on the money claims of illegally terminated local workers with fixed-term
employment.115
We observed that illegally dismissed overseas workers whose employment contracts had a
term of less than one year were granted the amount equivalent to the unexpired portion of
their employment contracts.116 Meanwhile, illegally dismissed overseas workers with
employment terms of at least a year were granted a cap equivalent to three months of their
salary for the unexpired portions of their contracts.117
Observing the terminologies used inthe clause, we also found that "the subject clause creates
a sub-layer of discrimination among OFWs whose contract periods are for more than one year:
those who are illegally dismissed with less than one year left in their contracts shall be entitled
to their salaries for the entire unexpired portion thereof, while those who are illegally
dismissed with one year or more remaining in their contracts shall be covered by the
37
reinstated clause, and their monetary benefits limited to their salaries for three months
only."118
We do not need strict scrutiny to conclude that these classifications do not rest on any real or
substantial distinctions that would justify different treatments in terms of the computation of
money claims resulting from illegal termination.
Overseas workers regardless of their classifications are entitled to security of tenure, at least
for the period agreed upon in their contracts. This means that they cannot be dismissed before
the end of their contract terms without due process. If they were illegally dismissed, the
workers’ right to security of tenure is violated.
The rights violated when, say, a fixed-period local worker is illegally terminated are neither
greater than norless than the rights violated when a fixed-period overseas worker is illegally
terminated. It is state policy to protect the rights of workers withoutqualification as to the
place of employment.119 In both cases, the workers are deprived of their expected salary,
which they could have earned had they not been illegally dismissed. For both workers, this
deprivation translates to economic insecurity and disparity.120 The same is true for the
distinctions between overseas workers with an employment contract of less than one year
and overseas workers with at least one year of employment contract, and between overseas
workers with at least a year left in their contracts and overseas workers with less than a year
left in their contracts when they were illegally dismissed.
For this reason, we cannot subscribe to the argument that "[overseas workers] are contractual
employeeswho can never acquire regular employment status, unlike local workers"121
because it already justifies differentiated treatment in terms ofthe computation of money
claims.122
Likewise, the jurisdictional and enforcement issues on overseas workers’ money claims do not
justify a differentiated treatment in the computation of their money claims.123 If anything,
these issues justify an equal, if not greater protection and assistance to overseas workers
who generally are more prone to exploitation given their physical distance from our
government.
We also find that the classificationsare not relevant to the purpose of the law, which is to
"establish a higher standard of protection and promotion of the welfare of migrant workers,
their families and overseas Filipinos in distress, and for other purposes."124 Further, we find
specious the argument that reducing the liability of placement agencies "redounds to the
benefit of the [overseas] workers."125
Putting a cap on the money claims of certain overseas workers does not increase the standard
of protection afforded to them. On the other hand, foreign employers are more incentivizedby
the reinstated clause to enter into contracts of at least a year because it gives them more
flexibility to violate our overseas workers’ rights. Their liability for arbitrarily terminating
overseas workers is decreased at the expense of the workers whose rights they violated.
Meanwhile, these overseas workers who are impressed with an expectation of a stable job
overseas for the longer contract period disregard other opportunities only to be terminated
earlier. They are left with claims that are less than what others in the same situation would
receive. The reinstated clause, therefore, creates a situation where the law meant to protect
them makes violation of rights easier and simply benign to the violator.
As Justice Brion said in his concurring opinion in Serrano:
Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and in fact provides
a hidden twist affecting the principal/employer’s liability. While intended as an incentive
accruing to recruitment/manning agencies, the law, as worded, simply limits the OFWs’
recovery in wrongfuldismissal situations. Thus, it redounds to the benefit of whoever may be
liable, including the principal/employer – the direct employer primarily liable for the wrongful
dismissal. In this sense, Section 10 – read as a grant of incentives to recruitment/manning
agencies – oversteps what it aims to do by effectively limiting what is otherwise the full liability
of the foreign principals/employers. Section 10, in short, really operates to benefit the wrong
party and allows that party, without justifiable reason, to mitigate its liability for wrongful
dismissals. Because of this hidden twist, the limitation ofliability under Section 10 cannot be
an "appropriate" incentive, to borrow the term that R.A. No. 8042 itself uses to describe the
incentive it envisions under its purpose clause.
What worsens the situation is the chosen mode of granting the incentive: instead of a grant
that, to encourage greater efforts at recruitment, is directly related to extra efforts
undertaken, the law simply limits their liability for the wrongful dismissals of already deployed
OFWs. This is effectively a legally-imposed partial condonation of their liability to OFWs,
justified solely by the law’s intent to encourage greater deployment efforts. Thus, the
incentive,from a more practical and realistic view, is really part of a scheme to sell Filipino
overseas labor at a bargain for purposes solely of attracting the market. . . .
The so-called incentive is rendered particularly odious by its effect on the OFWs — the benefits
accruing to the recruitment/manning agencies and their principals are takenfrom the pockets
of the OFWs to whom the full salaries for the unexpired portion of the contract rightfully
belong. Thus, the principals/employers and the recruitment/manning agencies even profit
from their violation of the security of tenure that an employment contract embodies.
Conversely, lesser protection is afforded the OFW, not only because of the lessened recovery
afforded him or her by operation of law, but also because this same lessened recovery renders
a wrongful dismissal easier and less onerous to undertake; the lesser cost of dismissing a
Filipino will always bea consideration a foreign employer will take into account in termination
of employment decisions. . . .126
Further, "[t]here can never be a justification for any form of government action that alleviates
the burden of one sector, but imposes the same burden on another sector, especially when
the favored sector is composed of private businesses suchas placement agencies, while the
38
disadvantaged sector is composed ofOFWs whose protection no less than the Constitution
commands. The idea thatprivate business interest can be elevated to the level of a compelling
state interest is odious."127
Along the same line, we held that the reinstated clause violates due process rights. It is
arbitrary as it deprives overseas workers of their monetary claims without any discernable
valid purpose.128
Respondent Joy Cabiles is entitled to her salary for the unexpired portion of her contract, in
accordance with Section 10 of Republic Act No. 8042. The award of the three-month
equivalence of respondent’s salary must be modified accordingly. Since she started working
on June 26, 1997 and was terminated on July 14, 1997, respondent is entitled to her salary
from July 15, 1997 to June 25, 1998. "To rule otherwise would be iniquitous to petitioner and
other OFWs, and would,in effect, send a wrong signal that principals/employers and
recruitment/manning agencies may violate an OFW’s security of tenure which an employment
contract embodies and actually profit from such violation based on an unconstitutional
provision of law."129
III
On the interest rate, the Bangko Sentral ng Pilipinas Circular No. 799 of June 21, 2013, which
revised the interest rate for loan or forbearance from 12% to 6% in the absence of
stipulation,applies in this case. The pertinent portions of Circular No. 799, Series of 2013,
read: The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the
following revisions governing the rate of interest in the absence of stipulation in loan
contracts, thereby amending Section 2 of Circular No. 905, Series of 1982:
Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and
the rate allowed in judgments, in the absence of an express contract as to such rateof interest,
shall be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks
and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank
Financial Institutions are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
Through the able ponencia of Justice Diosdado Peralta, we laid down the guidelines in
computing legal interest in Nacar v. Gallery Frames:130
II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money,
i.e., a loan or forbearance of money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due shall itself earn legal interest
from the time it is judicially demanded. In the absence of stipulation, the rate of
interest shall be 6% per annum to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of Article 1169 of the Civil
Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached,
an interest on the amount of damages awarded may be imposed at the discretion of
the court at the rate of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages, except when or until the demand can be established
with reasonable certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be
so reasonably established at the time the demand is made, the interest shall begin to
run only from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably ascertained). The
actual base for the computation of legal interest shall, in any case, be on the amount
finally adjudged. 3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its
satisfaction, this interim period being deemed to be by then an equivalent to a
forbearance of credit.
And, in addition to the above, judgments that have become final and executory prior to July
1, 2013, shall not be disturbed and shall continue to be implemented applying the rate of
interest fixed therein.131
Circular No. 799 is applicable only in loans and forbearance of money, goods, or credits, and
in judgments when there is no stipulation on the applicable interest rate. Further, it is only
applicable if the judgment did not become final and executory before July 1, 2013.132
We add that Circular No. 799 is not applicable when there is a law that states otherwise. While
the Bangko Sentral ng Pilipinas has the power to set or limit interest rates,133 these interest
rates do not apply when the law provides that a different interest rate shall be applied. "[A]
Central Bank Circular cannot repeal a law. Only a law can repeal another law."134
For example, Section 10 of Republic Act No. 8042 provides that unlawfully terminated
overseas workers are entitled to the reimbursement of his or her placement fee with an
interest of 12% per annum. Since Bangko Sentral ng Pilipinas circulars cannotrepeal Republic
Act No. 8042, the issuance of Circular No. 799 does not have the effect of changing the
interest on awards for reimbursement of placement fees from 12% to 6%. This is despite
39
Section 1 of Circular No. 799, which provides that the 6% interest rate applies even to
judgments.
Moreover, laws are deemed incorporated in contracts. "The contracting parties need not
repeat them. They do not even have to be referred to. Every contract, thus, contains not only
what has been explicitly stipulated, but the statutory provisions that have any bearing on the
matter."135 There is, therefore, an implied stipulation in contracts between the placement
agency and the overseasworker that in case the overseas worker is adjudged as entitled to
reimbursement of his or her placement fees, the amount shall be subject to a 12% interest
per annum. This implied stipulation has the effect of removing awards for reimbursement of
placement fees from Circular No. 799’s coverage.
The same cannot be said for awardsof salary for the unexpired portion of the employment
contract under Republic Act No. 8042. These awards are covered by Circular No. 799 because
the law does not provide for a specific interest rate that should apply.
In sum, if judgment did not become final and executory before July 1, 2013 and there was
no stipulation in the contract providing for a different interest rate, other money claims under
Section 10 of Republic Act No. 8042 shall be subject to the 6% interest per annum in
accordance with Circular No. 799.
This means that respondent is also entitled to an interest of 6% per annum on her money
claims from the finality of this judgment.
IV
Finally, we clarify the liabilities ofWacoal as principal and petitioner as the employment agency
that facilitated respondent’s overseas employment.
Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995 provides that the foreign
employer and the local employment agency are jointly and severally liable for money claims
including claims arising out of an employer-employee relationship and/or damages. This
section also provides that the performance bond filed by the local agency shall be answerable
for such money claims or damages if they were awarded to the employee.
This provision is in line with the state’s policy of affording protection to labor and alleviating
workers’ plight.136
In overseas employment, the filing of money claims against the foreign employer is attended
by practical and legal complications.1âwphi1 The distance of the foreign employer alonemakes
it difficult for an overseas worker to reach it and make it liable for violations of the Labor
Code. There are also possible conflict of laws, jurisdictional issues, and procedural rules that
may be raised to frustrate an overseas worker’sattempt to advance his or her claims.
It may be argued, for instance, that the foreign employer must be impleaded in the complaint
as an indispensable party without which no final determination can be had of an action.137
The provision on joint and several liability in the Migrant Workers and Overseas Filipinos Act
of 1995 assures overseas workers that their rights will not be frustrated with these
complications. The fundamental effect of joint and several liability is that "each of the debtors
is liable for the entire obligation."138 A final determination may, therefore, be achieved even
if only oneof the joint and several debtors are impleaded in an action. Hence, in the case of
overseas employment, either the local agency or the foreign employer may be sued for all
claims arising from the foreign employer’s labor law violations. This way, the overseas workers
are assured that someone — the foreign employer’s local agent — may be made to answer
for violationsthat the foreign employer may have committed.
The Migrant Workers and Overseas Filipinos Act of 1995 ensures that overseas workers have
recourse in law despite the circumstances of their employment. By providing that the liability
of the foreign employer may be "enforced to the full extent"139 against the local agent,the
overseas worker is assured of immediate and sufficientpayment of what is due them.140
Corollary to the assurance of immediate recourse in law, the provision on joint and several
liability in the Migrant Workers and Overseas Filipinos Act of 1995 shifts the burden of going
after the foreign employer from the overseas worker to the local employment agency.
However, it must be emphasized that the local agency that is held to answer for the overseas
worker’s money claims is not leftwithout remedy. The law does not preclude it from going
after the foreign employer for reimbursement of whatever payment it has made to the
employee to answer for the money claims against the foreign employer.
A further implication of making localagencies jointly and severally liable with the foreign
employer is thatan additional layer of protection is afforded to overseas workers. Local
agencies, which are businesses by nature, are inoculated with interest in being always on the
lookout against foreign employers that tend to violate labor law. Lest they risk their reputation
or finances, local agenciesmust already have mechanisms for guarding against unscrupulous
foreign employers even at the level prior to overseas employment applications.
With the present state of the pleadings, it is not possible to determine whether there was
indeed a transfer of obligations from petitioner to Pacific. This should not be an obstacle for
the respondent overseas worker to proceed with the enforcement of this judgment. Petitioner
is possessed with the resources to determine the proper legal remedies to enforce its rights
against Pacific, if any.
V
Many times, this court has spoken on what Filipinos may encounter as they travel into the
farthest and mostdifficult reaches of our planet to provide for their families. In Prieto v.
NLRC:141
40
The Court is not unaware of the many abuses suffered by our overseas workers in the foreign
land where they have ventured, usually with heavy hearts, in pursuit of a more fulfilling future.
Breach of contract, maltreatment, rape, insufficient nourishment, sub-human lodgings, insults
and other forms of debasement, are only a few of the inhumane acts towhich they are
subjected by their foreign employers, who probably feel they can do as they please in their
own country. Whilethese workers may indeed have relatively little defense against
exploitation while they are abroad, that disadvantage must not continue to burden them when
they return to their own territory to voice their muted complaint. There is no reason why, in
their very own land, the protection of our own laws cannot be extended to them in full
measure for the redress of their grievances.142
But it seems that we have not said enough.
We face a diaspora of Filipinos. Their travails and their heroism can be told a million times
over; each of their stories as real as any other. Overseas Filipino workers brave alien cultures
and the heartbreak of families left behind daily. They would count the minutes, hours, days,
months, and years yearning to see their sons and daughters. We all know of the joy and
sadness when they come home to see them all grown up and, being so, they remember what
their work has cost them. Twitter accounts, Facetime, and many other gadgets and online
applications will never substitute for their lost physical presence.
Unknown to them, they keep our economy afloat through the ebb and flow of political and
economic crises. They are our true diplomats, they who show the world the resilience,
patience, and creativity of our people. Indeed, we are a people who contribute much to the
provision of material creations of this world.
This government loses its soul if we fail to ensure decent treatment for all Filipinos. We default
by limiting the contractual wages that should be paid to our workers when their contracts are
breached by the foreign employers. While we sit, this court will ensure that our laws will
reward our overseas workers with what they deserve: their dignity.
Inevitably, their dignity is ours as weil.
WHEREFORE, the petition is DENIED. The decision of the Court of Appeals is AFFIRMED with
modification. Petitioner Sameer Overseas Placement Agency is ORDERED to pay respondent
Joy C. Cabiles the amount equivalent to her salary for the unexpired portion of her
employment contract at an interest of 6% per annum from the finality of this judgment.
Petitioner is also ORDERED to reimburse respondent the withheld NT$3,000.00 salary and
pay respondent attorney's fees of NT$300.00 at an interest of 6% per annum from the finality
of this judgment.
The clause, "or for three (3) months for every year of the unexpired term, whichever is less"
in Section 7 of Republic Act No. 10022 amending Section 10 of Republic Act No. 8042 is
declared unconstitutional and, therefore, null and void.
SO ORDERED.
G.R. No. 167622 June 29, 2010
GREGORIO V. TONGKO, Petitioner,
vs.
THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL
DE DIOS, Respondents.
RESOLUTION
BRION, J.:
This resolves the Motion for Reconsideration 1 dated December 3, 2008 filed by respondent
The Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) to set aside our Decision of
November 7, 2008. In the assailed decision, we found that an employer-employee relationship
existed between Manulife and petitioner Gregorio Tongko and ordered Manulife to pay Tongko
backwages and separation pay for illegal dismissal.
The following facts have been stated in our Decision of November 7, 2008, now under
reconsideration, but are repeated, simply for purposes of clarity.
The contractual relationship between Tongko and Manulife had two basic phases. The first or
initial phase began on July 1, 1977, under a Career Agent’s Agreement (Agreement) that
provided:
It is understood and agreed that the Agent is an independent contractor and nothing contained
herein shall be construed or interpreted as creating an employer-employee relationship
between the Company and the Agent.
xxxx
a) The Agent shall canvass for applications for Life Insurance, Annuities, Group policies and
other products offered by the Company, and collect, in exchange for provisional receipts
issued by the Agent, money due to or become due to the Company in respect of applications
or policies obtained by or through the Agent or from policyholders allotted by the Company
to the Agent for servicing, subject to subsequent confirmation of receipt of payment by the
Company as evidenced by an Official Receipt issued by the Company directly to the
policyholder.
xxxx
41
The Company may terminate this Agreement for any breach or violation of any of the
provisions hereof by the Agent by giving written notice to the Agent within fifteen (15) days
from the time of the discovery of the breach. No waiver, extinguishment, abandonment,
withdrawal or cancellation of the right to terminate this Agreement by the Company shall be
construed for any previous failure to exercise its right under any provision of this Agreement.
Either of the parties hereto may likewise terminate his Agreement at any time without cause,
by giving to the other party fifteen (15) days notice in writing.2
Tongko additionally agreed (1) to comply with all regulations and requirements of Manulife,
and (2) to maintain a standard of knowledge and competency in the sale of Manulife’s
products, satisfactory to Manulife and sufficient to meet the volume of the new business,
required by his Production Club membership.3
The second phase started in 1983 when Tongko was named Unit Manager in Manulife’s Sales
Agency Organization. In 1990, he became a Branch Manager. Six years later (or in 1996),
Tongko became a Regional Sales Manager.4
Tongko’s gross earnings consisted of commissions, persistency income, and management
overrides. Since the beginning, Tongko consistently declared himself self-employed in his
income tax returns. Thus, under oath, he declared his gross business income and deducted
his business expenses to arrive at his taxable business income. Manulife withheld the
corresponding 10% tax on Tongko’s earnings.5
In 2001, Manulife instituted manpower development programs at the regional sales
management level. Respondent Renato Vergel de Dios wrote Tongko a letter dated November
6, 2001 on concerns that were brought up during the October 18, 2001 Metro North Sales
Managers Meeting. De Dios wrote:
The first step to transforming Manulife into a big league player has been very clear – to
increase the number of agents to at least 1,000 strong for a start. This may seem diametrically
opposed to the way Manulife was run when you first joined the organization. Since then,
however, substantial changes have taken place in the organization, as these have been
influenced by developments both from within and without the company.
xxxx
The issues around agent recruiting are central to the intended objectives hence the need for
a Senior Managers’ meeting earlier last month when Kevin O’Connor, SVP-Agency, took to
the floor to determine from our senior agency leaders what more could be done to bolster
manpower development. At earlier meetings, Kevin had presented information where
evidently, your Region was the lowest performer (on a per Manager basis) in terms of
recruiting in 2000 and, as of today, continues to remain one of the laggards in this area.
While discussions, in general, were positive other than for certain comments from your end
which were perceived to be uncalled for, it became clear that a one-on-one meeting with you
was necessary to ensure that you and management, were on the same plane. As gleaned
from some of your previous comments in prior meetings (both in group and one-on-one), it
was not clear that we were proceeding in the same direction.
Kevin held subsequent series of meetings with you as a result, one of which I joined briefly.
In those subsequent meetings you reiterated certain views, the validity of which we
challenged and subsequently found as having no basis.
With such views coming from you, I was a bit concerned that the rest of the Metro North
Managers may be a bit confused as to the directions the company was taking. For this reason,
I sought a meeting with everyone in your management team, including you, to clear the air,
so to speak.
This note is intended to confirm the items that were discussed at the said Metro North Region’s
Sales Managers meeting held at the 7/F Conference room last 18 October.
xxxx
Issue # 2: "Some Managers are unhappy with their earnings and would want to revert to the
position of agents."
This is an often repeated issue you have raised with me and with Kevin. For this reason, I
placed the issue on the table before the rest of your Region’s Sales Managers to verify its
validity. As you must have noted, no Sales Manager came forward on their own to confirm
your statement and it took you to name Malou Samson as a source of the same, an allegation
that Malou herself denied at our meeting and in your very presence.
This only confirms, Greg, that those prior comments have no solid basis at all. I now believe
what I had thought all along, that these allegations were simply meant to muddle the issues
surrounding the inability of your Region to meet its agency development objectives!
Issue # 3: "Sales Managers are doing what the company asks them to do but, in the process,
they earn less."
xxxx
All the above notwithstanding, we had your own records checked and we found that you made
a lot more money in the Year 2000 versus 1999. In addition, you also volunteered the
information to Kevin when you said that you probably will make more money in the Year 2001
compared to Year 2000. Obviously, your above statement about making "less money" did not
42
refer to you but the way you argued this point had us almost believing that you were spouting
the gospel of truth when you were not. x x x
xxxx
All of a sudden, Greg, I have become much more worried about your ability to lead this group
towards the new direction that we have been discussing these past few weeks, i.e., Manulife’s
goal to become a major agency-led distribution company in the Philippines. While as you
claim, you have not stopped anyone from recruiting, I have never heard you proactively push
for greater agency recruiting. You have not been proactive all these years when it comes to
agency growth.
xxxx
I cannot afford to see a major region fail to deliver on its developmental goals next year and
so, we are making the following changes in the interim:
1. You will hire at your expense a competent assistant who can unload you of much of the
routine tasks which can be easily delegated. This assistant should be so chosen as to
complement your skills and help you in the areas where you feel "may not be your cup of
tea."
You have stated, if not implied, that your work as Regional Manager may be too taxing for
you and for your health. The above could solve this problem.
xxxx
2. Effective immediately, Kevin and the rest of the Agency Operations will deal with the North
Star Branch (NSB) in autonomous fashion. x x x
I have decided to make this change so as to reduce your span of control and allow you to
concentrate more fully on overseeing the remaining groups under Metro North, your Central
Unit and the rest of the Sales Managers in Metro North. I will hold you solely responsible for
meeting the objectives of these remaining groups.
xxxx
The above changes can end at this point and they need not go any further. This, however, is
entirely dependent upon you. But you have to understand that meeting corporate objectives
by everyone is primary and will not be compromised. We are meeting tough challenges next
year, and I would want everybody on board. Any resistance or holding back by anyone will
be dealt with accordingly.6
Subsequently, de Dios wrote Tongko another letter, dated December 18, 2001, terminating
Tongko’s services:
It would appear, however, that despite the series of meetings and communications, both one-
on-one meetings between yourself and SVP Kevin O’Connor, some of them with me, as well
as group meetings with your Sales Managers, all these efforts have failed in helping you align
your directions with Management’s avowed agency growth policy.
xxxx
On account thereof, Management is exercising its prerogative under Section 14 of your Agents
Contract as we are now issuing this notice of termination of your Agency Agreement with us
effective fifteen days from the date of this letter.7
Tongko responded by filing an illegal dismissal complaint with the National Labor Relations
Commission (NLRC) Arbitration Branch. He essentially alleged – despite the clear terms of the
letter terminating his Agency Agreement – that he was Manulife’s employee before he was
illegally dismissed.8
Thus, the threshold issue is the existence of an employment relationship. A finding that none
exists renders the question of illegal dismissal moot; a finding that an employment
relationship exists, on the other hand, necessarily leads to the need to determine the validity
of the termination of the relationship.
A. Tongko’s Case for Employment Relationship
Tongko asserted that as Unit Manager, he was paid an annual over-rider not exceeding
₱50,000.00, regardless of production levels attained and exclusive of commissions and
bonuses. He also claimed that as Regional Sales Manager, he was given a travel and
entertainment allowance of ₱36,000.00 per year in addition to his overriding commissions;
he was tasked with numerous administrative functions and supervisory authority over
Manulife’s employees, aside from merely selling policies and recruiting agents for Manulife;
and he recommended and recruited insurance agents subject to vetting and approval by
Manulife. He further alleges that he was assigned a definite place in the Manulife offices when
he was not in the field – at the 3rd Floor, Manulife Center, 108 Tordesillas corner Gallardo
Sts., Salcedo Village, Makati City – for which he never paid any rental. Manulife provided the
office equipment he used, including tables, chairs, computers and printers (and even office
stationery), and paid for the electricity, water and telephone bills. As Regional Sales Manager,
Tongko additionally asserts that he was required to follow at least three codes of conduct. 9
B. Manulife’s Case – Agency Relationship with Tongko
Manulife argues that Tongko had no fixed wage or salary. Under the Agreement, Tongko was
paid commissions of varying amounts, computed based on the premium paid in full and
43
actually received by Manulife on policies obtained through an agent. As sales manager,
Tongko was paid overriding sales commission derived from sales made by agents under his
unit/structure/branch/region. Manulife also points out that it deducted and withheld a 10%
tax from all commissions Tongko received; Tongko even declared himself to be self-employed
and consistently paid taxes as such—i.e., he availed of tax deductions such as ordinary and
necessary trade, business and professional expenses to which a business is entitled.
Manulife asserts that the labor tribunals have no jurisdiction over Tongko’s claim as he was
not its employee as characterized in the four-fold test and our ruling in Carungcong v. National
Labor Relations Commission.10
The Conflicting Rulings of the Lower Tribunals
The labor arbiter decreed that no employer-employee relationship existed between the
parties. However, the NLRC reversed the labor arbiter’s decision on appeal; it found the
existence of an employer-employee relationship and concluded that Tongko had been illegally
dismissed. In the petition for certiorari with the Court of Appeals (CA), the appellate court
found that the NLRC gravely abused its discretion in its ruling and reverted to the labor
arbiter’s decision that no employer-employee relationship existed between Tongko and
Manulife.
Our Decision of November 7, 2008
In our Decision of November 7, 2008, we reversed the CA ruling and found that an
employment relationship existed between Tongko and Manulife. We concluded that Tongko is
Manulife’s employee for the following reasons:
1. Our ruling in the first Insular11 case did not foreclose the possibility of an insurance
agent becoming an employee of an insurance company; if evidence exists showing
that the company promulgated rules or regulations that effectively controlled or
restricted an insurance agent’s choice of methods or the methods themselves in selling
insurance, an employer-employee relationship would be present. The determination of
the existence of an employer-employee relationship is thus on a case-to-case basis
depending on the evidence on record.
2. Manulife had the power of control over Tongko, sufficient to characterize him as an
employee, as shown by the following indicators:
2.1 Tongko undertook to comply with Manulife’s rules, regulations and other
requirements, i.e., the different codes of conduct such as the Agent Code of
Conduct, the Manulife Financial Code of Conduct, and the Financial Code of
Conduct Agreement;
2.2 The various affidavits of Manulife’s insurance agents and managers, who
occupied similar positions as Tongko, showed that they performed
administrative duties that established employment with Manulife;12 and
2.3 Tongko was tasked to recruit some agents in addition to his other
administrative functions. De Dios’ letter harped on the direction Manulife
intended to take, viz., greater agency recruitment as the primary means to sell
more policies; Tongko’s alleged failure to follow this directive led to the
termination of his employment with Manulife.
The Motion for Reconsideration
Manulife disagreed with our Decision and filed the present motion for reconsideration on the
following GROUNDS:
1. The November 7[, 2008] Decision violates Manulife’s right to due process by: (a)
confining the review only to the issue of "control" and utterly disregarding all the other
issues that had been joined in this case; (b) mischaracterizing the divergence of
conclusions between the CA and the NLRC decisions as confined only to that on
"control"; (c) grossly failing to consider the findings and conclusions of the CA on the
majority of the material evidence, especially [Tongko’s] declaration in his income tax
returns that he was a "business person" or "self-employed"; and (d) allowing [Tongko]
to repudiate his sworn statement in a public document.
2. The November 7[, 2008] Decision contravenes settled rules in contract law and
agency, distorts not only the legal relationships of agencies to sell but also
distributorship and franchising, and ignores the constitutional and policy context of
contract law vis-à-vis labor law.
3. The November 7[, 2008] Decision ignores the findings of the CA on the three
elements of the four-fold test other than the "control" test, reverses well-settled
doctrines of law on employer-employee relationships, and grossly misapplies the
"control test," by selecting, without basis, a few items of evidence to the exclusion of
more material evidence to support its conclusion that there is "control."
4. The November 7[, 2008] Decision is judicial legislation, beyond the scope authorized
by Articles 8 and 9 of the Civil Code, beyond the powers granted to this Court under
Article VIII, Section 1 of the Constitution and contravenes through judicial legislation,
the constitutional prohibition against impairment of contracts under Article III, Section
10 of the Constitution.
5. For all the above reasons, the November 7[, 2008] Decision made unsustainable
and reversible errors, which should be corrected, in concluding that Respondent
Manulife and Petitioner had an employer-employee relationship, that Respondent
44
 Manulife illegally dismissed Petitioner, and for consequently ordering Respondent
Manulife to pay Petitioner backwages, separation pay, nominal damages and attorney’s
fees.13
THE COURT’S RULING
A. The Insurance and the Civil Codes;
the Parties’ Intent and Established
Industry Practices
We cannot consider the present case purely from a labor law perspective, oblivious that the
factual antecedents were set in the insurance industry so that the Insurance Code primarily
governs. Chapter IV, Title 1 of this Code is wholly devoted to "Insurance Agents and Brokers"
and specifically defines the agents and brokers relationship with the insurance company and
how they are governed by the Code and regulated by the Insurance Commission.
The Insurance Code, of course, does not wholly regulate the "agency" that it speaks of, as
agency is a civil law matter governed by the Civil Code. Thus, at the very least, three sets of
laws – namely, the Insurance Code, the Labor Code and the Civil Code – have to be considered
in looking at the present case. Not to be forgotten, too, is the Agreement (partly reproduced
on page 2 of this Dissent and which no one disputes) that the parties adopted to govern their
relationship for purposes of selling the insurance the company offers. To forget these other
laws is to take a myopic view of the present case and to add to the uncertainties that now
exist in considering the legal relationship between the insurance company and its "agents."
The main issue of whether an agency or an employment relationship exists depends on the
incidents of the relationship. The Labor Code concept of "control" has to be compared and
distinguished with the "control" that must necessarily exist in a principal-agent relationship.
The principal cannot but also have his or her say in directing the course of the principal-agent
relationship, especially in cases where the company-representative relationship in the
insurance industry is an agency.
a. The laws on insurance and agency
The business of insurance is a highly regulated commercial activity in the country, in terms
particularly of who can be in the insurance business, who can act for and in behalf of an
insurer, and how these parties shall conduct themselves in the insurance business. Section
186 of the Insurance Code provides that "No person, partnership, or association of persons
shall transact any insurance business in the Philippines except as agent of a person or
corporation authorized to do the business of insurance in the Philippines." Sections 299 and
300 of the Insurance Code on Insurance Agents and Brokers, among other provisions,
provide:
Section 299. No insurance company doing business in the Philippines, nor any agent thereof,
shall pay any commission or other compensation to any person for services in obtaining
insurance, unless such person shall have first procured from the Commissioner a license to
act as an insurance agent of such company or as an insurance broker as hereinafter provided.
No person shall act as an insurance agent or as an insurance broker in the solicitation or
procurement of applications for insurance, or receive for services in obtaining insurance, any
commission or other compensation from any insurance company doing business in the
Philippines or any agent thereof, without first procuring a license so to act from the
Commissioner x x x The Commissioner shall satisfy himself as to the competence and
trustworthiness of the applicant and shall have the right to refuse to issue or renew and to
suspend or revoke any such license in his discretion.1avvphi1.net
Section 300. Any person who for compensation solicits or obtains insurance on behalf of any
insurance company or transmits for a person other than himself an application for a policy or
contract of insurance to or from such company or offers or assumes to act in the negotiating
of such insurance shall be an insurance agent within the intent of this section and shall thereby
become liable to all the duties, requirements, liabilities and penalties to which an insurance
agent is subject.
The application for an insurance agent’s license requires a written examination, and the
applicant must be of good moral character and must not have been convicted of a crime
involving moral turpitude.14 The insurance agent who collects premiums from an insured
person for remittance to the insurance company does so in a fiduciary capacity, and an
insurance company which delivers an insurance policy or contract to an authorized agent is
deemed to have authorized the agent to receive payment on the company’s behalf. 15 Section
361 further prohibits the offer, negotiation, or collection of any amount other than that
specified in the policy and this covers any rebate from the premium or any special favor or
advantage in the dividends or benefit accruing from the policy.
Thus, under the Insurance Code, the agent must, as a matter of qualification, be licensed and
must also act within the parameters of the authority granted under the license and under the
contract with the principal. Other than the need for a license, the agent is limited in the way
he offers and negotiates for the sale of the company’s insurance products, in his collection
activities, and in the delivery of the insurance contract or policy. Rules regarding the desired
results (e.g., the required volume to continue to qualify as a company agent, rules to check
on the parameters on the authority given to the agent, and rules to ensure that industry,
legal and ethical rules are followed) are built-in elements of control specific to an insurance
agency and should not and cannot be read as elements of control that attend an employment
relationship governed by the Labor Code.
On the other hand, the Civil Code defines an agent as a "person [who] binds himself to render
some service or to do something in representation or on behalf of another, with the consent
or authority of the latter."16 While this is a very broad definition that on its face may even
45
encompass an employment relationship, the distinctions between agency and employment
are sufficiently established by law and jurisprudence.
Generally, the determinative element is the control exercised over the one rendering service.
The employer controls the employee both in the results and in the means and manner of
achieving this result. The principal in an agency relationship, on the other hand, also has the
prerogative to exercise control over the agent in undertaking the assigned task based on the
parameters outlined in the pertinent laws.
Under the general law on agency as applied to insurance, an agency must be express in light
of the need for a license and for the designation by the insurance company. In the present
case, the Agreement fully serves as grant of authority to Tongko as Manulife’s insurance
agent.17 This agreement is supplemented by the company’s agency practices and usages, duly
accepted by the agent in carrying out the agency.18 By authority of the Insurance Code, an
insurance agency is for compensation,19 a matter the Civil Code Rules on Agency presumes
in the absence of proof to the contrary.20 Other than the compensation, the principal is bound
to advance to, or to reimburse, the agent the agreed sums necessary for the execution of the
agency.21 By implication at least under Article 1994 of the Civil Code, the principal can appoint
two or more agents to carry out the same assigned tasks,22 based necessarily on the specific
instructions and directives given to them.
With particular relevance to the present case is the provision that "In the execution of the
agency, the agent shall act in accordance with the instructions of the principal." 23 This
provision is pertinent for purposes of the necessary control that the principal exercises over
the agent in undertaking the assigned task, and is an area where the instructions can intrude
into the labor law concept of control so that minute consideration of the facts is necessary. A
related article is Article 1891 of the Civil Code which binds the agent to render an account of
his transactions to the principal.
B. The Cited Case
The Decision of November 7, 2008 refers to the first Insular and Grepalife cases to establish
that the company rules and regulations that an agent has to comply with are indicative of an
employer-employee relationship.24 The Dissenting Opinions of Justice Presbitero Velasco, Jr.
and Justice Conchita Carpio Morales also cite Insular Life Assurance Co. v. National Labor
Relations Commission (second Insular case)25 to support the view that Tongko is Manulife’s
employee. On the other hand, Manulife cites the Carungcong case and AFP Mutual Benefit
Association, Inc. v. National Labor Relations Commission (AFPMBAI case) 26 to support its
allegation that Tongko was not its employee.
A caveat has been given above with respect to the use of the rulings in the cited cases because
none of them is on all fours with the present case; the uniqueness of the factual situation of
the present case prevents it from being directly and readily cast in the mold of the cited cases.
These cited cases are themselves different from one another; this difference underscores the
need to read and quote them in the context of their own factual situations.
The present case at first glance appears aligned with the facts in the Carungcong, the
Grepalife, and the second Insular Life cases. A critical difference, however, exists as these
cited cases dealt with the proper legal characterization of a subsequent management contract
that superseded the original agency contract between the insurance company and its agent.
Carungcong dealt with a subsequent Agreement making Carungcong a New Business Manager
that clearly superseded the Agreement designating Carungcong as an agent empowered to
solicit applications for insurance. The Grepalife case, on the other hand, dealt with the proper
legal characterization of the appointment of the Ruiz brothers to positions higher than their
original position as insurance agents. Thus, after analyzing the duties and functions of the
Ruiz brothers, as these were enumerated in their contracts, we concluded that the company
practically dictated the manner by which the Ruiz brothers were to carry out their jobs. Finally,
the second Insular Life case dealt with the implications of de los Reyes’ appointment as acting
unit manager which, like the subsequent contracts in the Carungcong and the Grepalife cases,
was clearly defined under a subsequent contract. In all these cited cases, a determination of
the presence of the Labor Code element of control was made on the basis of the stipulations
of the subsequent contracts.
In stark contrast with the Carungcong, the Grepalife, and the second Insular Life cases, the
only contract or document extant and submitted as evidence in the present case is the
Agreement – a pure agency agreement in the Civil Code context similar to the original contract
in the first Insular Life case and the contract in the AFPMBAI case. And while Tongko was later
on designated unit manager in 1983, Branch Manager in 1990, and Regional Sales Manager
in 1996, no formal contract regarding these undertakings appears in the records of the case.
Any such contract or agreement, had there been any, could have at the very least provided
the bases for properly ascertaining the juridical relationship established between the parties.
These critical differences, particularly between the present case and the Grepalife and the
second Insular Life cases, should therefore immediately drive us to be more prudent and
cautious in applying the rulings in these cases.
C. Analysis of the Evidence
c.1. The Agreement
The primary evidence in the present case is the July 1, 1977 Agreement that governed and
defined the parties’ relations until the Agreement’s termination in 2001. This Agreement stood
for more than two decades and, based on the records of the case, was never modified or
novated. It assumes primacy because it directly dealt with the nature of the parties’
relationship up to the very end; moreover, both parties never disputed its authenticity or the
accuracy of its terms.
46
By the Agreement’s express terms, Tongko served as an "insurance agent" for Manulife, not
as an employee. To be sure, the Agreement’s legal characterization of the nature of the
relationship cannot be conclusive and binding on the courts; as the dissent clearly stated, the
characterization of the juridical relationship the Agreement embodied is a matter of law that
is for the courts to determine. At the same time, though, the characterization the parties gave
to their relationship in the Agreement cannot simply be brushed aside because it embodies
their intent at the time they entered the Agreement, and they were governed by this
understanding throughout their relationship. At the very least, the provision on the absence
of employer-employee relationship between the parties can be an aid in considering the
Agreement and its implementation, and in appreciating the other evidence on record.
The parties’ legal characterization of their intent, although not conclusive, is critical in this
case because this intent is not illegal or outside the contemplation of law, particularly of the
Insurance and the Civil Codes. From this perspective, the provisions of the Insurance Code
cannot be disregarded as this Code (as heretofore already noted) expressly envisions a
principal-agent relationship between the insurance company and the insurance agent in the
sale of insurance to the public.1awph!1 For this reason, we can take judicial notice that as a
matter of Insurance Code-based business practice, an agency relationship prevails in the
insurance industry for the purpose of selling insurance. The Agreement, by its express terms,
is in accordance with the Insurance Code model when it provided for a principal-agent
relationship, and thus cannot lightly be set aside nor simply be considered as an agreement
that does not reflect the parties’ true intent. This intent, incidentally, is reinforced by the
system of compensation the Agreement provides, which likewise is in accordance with the
production-based sales commissions the Insurance Code provides.
Significantly, evidence shows that Tongko’s role as an insurance agent never changed during
his relationship with Manulife. If changes occurred at all, the changes did not appear to be in
the nature of their core relationship. Tongko essentially remained an agent, but moved up in
this role through Manulife’s recognition that he could use other agents approved by Manulife,
but operating under his guidance and in whose commissions he had a share. For want of a
better term, Tongko perhaps could be labeled as a "lead agent" who guided under his wing
other Manulife agents similarly tasked with the selling of Manulife insurance.
Like Tongko, the evidence suggests that these other agents operated under their own agency
agreements. Thus, if Tongko’s compensation scheme changed at all during his relationship
with Manulife, the change was solely for purposes of crediting him with his share in the
commissions the agents under his wing generated. As an agent who was recruiting and
guiding other insurance agents, Tongko likewise moved up in terms of the reimbursement of
expenses he incurred in the course of his lead agency, a prerogative he enjoyed pursuant to
Article 1912 of the Civil Code. Thus, Tongko received greater reimbursements for his expenses
and was even allowed to use Manulife facilities in his interactions with the agents, all of whom
were, in the strict sense, Manulife agents approved and certified as such by Manulife with the
Insurance Commission.
That Tongko assumed a leadership role but nevertheless wholly remained an agent is the
inevitable conclusion that results from the reading of the Agreement (the only agreement on
record in this case) and his continuing role thereunder as sales agent, from the perspective
of the Insurance and the Civil Codes and in light of what Tongko himself attested to as his
role as Regional Sales Manager. To be sure, this interpretation could have been contradicted
if other agreements had been submitted as evidence of the relationship between Manulife and
Tongko on the latter’s expanded undertakings. In the absence of any such evidence, however,
this reading – based on the available evidence and the applicable insurance and civil law
provisions – must stand, subject only to objective and evidentiary Labor Code tests on the
existence of an employer-employee relationship.
In applying such Labor Code tests, however, the enforcement of the Agreement during the
course of the parties’ relationship should be noted. From 1977 until the termination of the
Agreement, Tongko’s occupation was to sell Manulife’s insurance policies and products. Both
parties acquiesced with the terms and conditions of the Agreement. Tongko, for his part,
accepted all the benefits flowing from the Agreement, particularly the generous commissions.
Evidence indicates that Tongko consistently clung to the view that he was an independent
agent selling Manulife insurance products since he invariably declared himself a business or
self-employed person in his income tax returns. This consistency with, and action made
pursuant to the Agreement were pieces of evidence that were never mentioned nor
considered in our Decision of November 7, 2008. Had they been considered, they could,
at the very least, serve as Tongko’s admissions against his interest. Strictly speaking,
Tongko’s tax returns cannot but be legally significant because he certified under oath the
amount he earned as gross business income, claimed business deductions, leading to his net
taxable income. This should be evidence of the first order that cannot be brushed aside by a
mere denial. Even on a layman’s view that is devoid of legal considerations, the extent of his
annual income alone renders his claimed employment status doubtful. 27
Hand in hand with the concept of admission against interest in considering the tax returns,
the concept of estoppel – a legal and equitable concept28 – necessarily must come into play.
Tongko’s previous admissions in several years of tax returns as an independent agent, as
against his belated claim that he was all along an employee, are too diametrically opposed to
be simply dismissed or ignored. Interestingly, Justice Velasco’s dissenting opinion states that
Tongko was forced to declare himself a business or self-employed person by Manulife’s
persistent refusal to recognize him as its employee.29 Regrettably, the dissent has shown
no basis for this conclusion, an understandable omission since no evidence in fact
exists on this point in the records of the case. In fact, what the evidence shows is
Tongko’s full conformity with, and action as, an independent agent until his relationship with
Manulife took a bad turn.
Another interesting point the dissent raised with respect to the Agreement is its conclusion
that the Agreement negated any employment relationship between Tongko and Manulife so
that the commissions he earned as a sales agent should not be considered in the
47
determination of the backwages and separation pay that should be given to him. This part of
the dissent is correct although it went on to twist this conclusion by asserting that Tongko
had dual roles in his relationship with Manulife; he was an agent, not an employee, in so far
as he sold insurance for Manulife, but was an employee in his capacity as a manager. Thus,
the dissent concluded that Tongko’s backwages should only be with respect to his role as
Manulife’s manager.
The conclusion with respect to Tongko’s employment as a manager is, of course, unacceptable
for the legal, factual and practical reasons discussed in this Resolution. In brief, the factual
reason is grounded on the lack of evidentiary support of the conclusion that Manulife
exercised control over Tongko in the sense understood in the Labor Code. The legal reason,
partly based on the lack of factual basis, is the erroneous legal conclusion that Manulife
controlled Tongko and was thus its employee. The practical reason, on the other hand, is
the havoc that the dissent’s unwarranted conclusion would cause the insurance industry that,
by the law’s own design, operated along the lines of principal-agent relationship in the sale of
insurance.
c.2. Other Evidence of Alleged Control
A glaring evidentiary gap for Tongko in this case is the lack of evidence on record showing
that Manulife ever exercised means-and-manner control, even to a limited extent, over
Tongko during his ascent in Manulife’s sales ladder. In 1983, Tongko was appointed unit
manager. Inexplicably, Tongko never bothered to present any evidence at all on what this
designation meant. This also holds true for Tongko’s appointment as branch manager in 1990,
and as Regional Sales Manager in 1996. The best evidence of control – the agreement or
directive relating to Tongko’s duties and responsibilities – was never introduced as part of the
records of the case. The reality is, prior to de Dios’ letter, Manulife had practically left Tongko
alone not only in doing the business of selling insurance, but also in guiding the agents under
his wing. As discussed below, the alleged directives covered by de Dios’ letter, heretofore
quoted in full, were policy directions and targeted results that the company wanted Tongko
and the other sales groups to realign with in their own selling activities. This is the reality that
the parties’ presented evidence consistently tells us.
What, to Tongko, serve as evidence of labor law control are the codes of conduct that Manulife
imposes on its agents in the sale of insurance. The mere presentation of codes or of rules and
regulations, however, is not per se indicative of labor law control as the law and jurisprudence
teach us.
As already recited above, the Insurance Code imposes obligations on both the insurance
company and its agents in the performance of their respective obligations under the Code,
particularly on licenses and their renewals, on the representations to be made to potential
customers, the collection of premiums, on the delivery of insurance policies, on the matter of
compensation, and on measures to ensure ethical business practice in the industry.
The general law on agency, on the other hand, expressly allows the principal an element of
control over the agent in a manner consistent with an agency relationship. In this sense, these
control measures cannot be read as indicative of labor law control. Foremost among these
are the directives that the principal may impose on the agent to achieve the assigned tasks,
to the extent that they do not involve the means and manner of undertaking these tasks. The
law likewise obligates the agent to render an account; in this sense, the principal may impose
on the agent specific instructions on how an account shall be made, particularly on the matter
of expenses and reimbursements. To these extents, control can be imposed through rules and
regulations without intruding into the labor law concept of control for purposes of
employment.
From jurisprudence, an important lesson that the first Insular Life case teaches us is that a
commitment to abide by the rules and regulations of an insurance company does not ipso
facto make the insurance agent an employee. Neither do guidelines somehow restrictive of
the insurance agent’s conduct necessarily indicate "control" as this term is defined in
jurisprudence. Guidelines indicative of labor law "control," as the first Insular Life
case tells us, should not merely relate to the mutually desirable result intended by
the contractual relationship; they must have the nature of dictating the means or
methods to be employed in attaining the result, or of fixing the methodology and of binding
or restricting the party hired to the use of these means. In fact, results-wise, the principal
can impose production quotas and can determine how many agents, with specific territories,
ought to be employed to achieve the company’s objectives. These are management policy
decisions that the labor law element of control cannot reach. Our ruling in these respects in
the first Insular Life case was practically reiterated in Carungcong. Thus, as will be shown
more fully below, Manulife’s codes of conduct,30 all of which do not intrude into the insurance
agents’ means and manner of conducting their sales and only control them as to the desired
results and Insurance Code norms, cannot be used as basis for a finding that the labor law
concept of control existed between Manulife and Tongko.
The dissent considers the imposition of administrative and managerial functions on Tongko
as indicative of labor law control; thus, Tongko as manager, but not as insurance agent,
became Manulife’s employee. It drew this conclusion from what the other Manulife managers
disclosed in their affidavits (i.e., their enumerated administrative and managerial functions)
and after comparing these statements with the managers in Grepalife. The dissent compared
the control exercised by Manulife over its managers in the present case with the control the
managers in the Grepalife case exercised over their employees by presenting the following
matrix:31
Duties of Manulife’s Manager Duties of Grepalife’s Managers/Supervisors
- to render or recommend prospective - train understudies for the position of district
agents to be licensed, trained and manager
contracted to sell Manulife products and
who will be part of my Unit
48
 - to coordinate activities of the agents - properly account, record and document the district managers, and maintain his quota of sales (the failure of which is a ground for
under [the managers’] Unit in [the company’s funds, spot-check and audit the termination).
agents’] daily, weekly and monthly selling work of the zone supervisors, x x x follow up  the Zone Supervisor’s (also in Grepalife) has the duty to direct and supervise the
activities, making sure that their the submission of weekly remittance reports sales activities of the debit agents under him, conserve company property through
respective sales targets are met; of the debit agents and zone supervisors "reinstatements," undertake and discharge the functions of absentee debit agents,
spot-check the records of debit agents, and insure proper documentation of sales and
collections by the debit agents.
- to conduct periodic training sessions for - direct and supervise the sales activities of
[the] agents to further enhance their the debit agents under him, x x x undertake
sales skill; and and discharge the functions of absentee debit These job contents are worlds apart in terms of "control." In Grepalife, the details of how to
agents, spot-check the record of debit do the job are specified and pre-determined; in the present case, the operative words are the
"sales target," the methodology being left undefined except to the extent of being
- to assist [the] agents with their sales agents, and insure proper documentation of
"coordinative." To be sure, a "coordinative" standard for a manager cannot be indicative of
activities by way of joint fieldwork, sales and collections of debit agents.
control; the standard only essentially describes what a Branch Manager is – the person in the
consultations and one-on-one evaluation
lead who orchestrates activities within the group. To "coordinate," and thereby to lead and to
and analysis of particular accounts
orchestrate, is not so much a matter of control by Manulife; it is simply a statement of a
branch manager’s role in relation with his agents from the point of view of Manulife whose
Aside from these affidavits however, no other evidence exists regarding the effects of business Tongko’s sales group carries.
Tongko’s additional roles in Manulife’s sales operations on the contractual relationship
between them. A disturbing note, with respect to the presented affidavits and Tongko’s alleged administrative
functions, is the selective citation of the portions supportive of an employment relationship
To the dissent, Tongko’s administrative functions as recruiter, trainer, or supervisor of other and the consequent omission of portions leading to the contrary conclusion. For example, the
sales agents constituted a substantive alteration of Manulife’s authority over Tongko and the following portions of the affidavit of Regional Sales Manager John Chua, with counterparts in
performance of his end of the relationship with Manulife. We could not deny though that the other affidavits, were not brought out in the Decision of November 7, 2008, while the
Tongko remained, first and foremost, an insurance agent, and that his additional role as other portions suggesting labor law control were highlighted. Specifically, the following
Branch Manager did not lessen his main and dominant role as insurance agent; this role portions of the affidavits were not brought out:32
continued to dominate the relations between Tongko and Manulife even after Tongko assumed
his leadership role among agents. This conclusion cannot be denied because it proceeds from 1.a. I have no fixed wages or salary since my services are compensated by way of
the undisputed fact that Tongko and Manulife never altered their July 1, 1977 Agreement, a commissions based on the computed premiums paid in full on the policies obtained
distinction the present case has with the contractual changes made in the second Insular Life thereat;
case. Tongko’s results-based commissions, too, attest to the primacy he gave to his role as
insurance sales agent. 1.b. I have no fixed working hours and employ my own method in soliticing insurance
at a time and place I see fit;
The dissent apparently did not also properly analyze and appreciate the great qualitative
difference that exists between: 1.c. I have my own assistant and messenger who handle my daily work load;

 the Manulife managers’ role is to coordinate activities of the agents under the 1.d. I use my own facilities, tools, materials and supplies in carrying out my business
managers’ Unit in the agents’ daily, weekly, and monthly selling activities, making sure of selling insurance;
that their respective sales targets are met.
 the District Manager’s duty in Grepalife is to properly account, record, and document
xxxx
the company's funds, spot-check and audit the work of the zone supervisors, conserve
the company's business in the district through "reinstatements," follow up the
submission of weekly remittance reports of the debit agents and zone supervisors, 6. I have my own staff that handles the day to day operations of my office;
preserve company property in good condition, train understudies for the position of
7. My staff are my own employees and received salaries from me;

49
 xxxx
9. My commission and incentives are all reported to the Bureau of Internal Revenue
(BIR) as income by a self-employed individual or professional with a ten (10) percent
creditable withholding tax. I also remit monthly for professionals.
These statements, read with the above comparative analysis of the Manulife and the Grepalife
cases, would have readily yielded the conclusion that no employer-employee relationship
existed between Manulife and Tongko.
Even de Dios’ letter is not determinative of control as it indicates the least amount of intrusion
into Tongko’s exercise of his role as manager in guiding the sales agents. Strictly viewed, de
Dios’ directives are merely operational guidelines on how Tongko could align his operations
with Manulife’s re-directed goal of being a "big league player." The method is to expand
coverage through the use of more agents. This requirement for the recruitment of more
agents is not a means-and-method control as it relates, more than anything else, and is
directly relevant, to Manulife’s objective of expanded business operations through the use of
a bigger sales force whose members are all on a principal-agent relationship. An important
point to note here is that Tongko was not supervising regular full-time employees of Manulife
engaged in the running of the insurance business; Tongko was effectively guiding his corps
of sales agents, who are bound to Manulife through the same Agreement that he had with
Manulife, all the while sharing in these agents’ commissions through his overrides. This is the
lead agent concept mentioned above for want of a more appropriate term, since the title of
Branch Manager used by the parties is really a misnomer given that what is involved is not a
specific regular branch of the company but a corps of non-employed agents, defined in terms
of covered territory, through which the company sells insurance. Still another point to consider
is that Tongko was not even setting policies in the way a regular company manager does;
company aims and objectives were simply relayed to him with suggestions on how these
objectives can be reached through the expansion of a non-employee sales force.
Interestingly, a large part of de Dios’ letter focused on income, which Manulife demonstrated,
in Tongko’s case, to be unaffected by the new goal and direction the company had set. Income
in insurance agency, of course, is dependent on results, not on the means and manner of
selling – a matter for Tongko and his agents to determine and an area into which Manulife
had not waded. Undeniably, de Dios’ letter contained a directive to secure a competent
assistant at Tongko’s own expense. While couched in terms of a directive, it cannot strictly
be understood as an intrusion into Tongko’s method of operating and supervising the group
of agents within his delineated territory. More than anything else, the "directive" was a signal
to Tongko that his results were unsatisfactory, and was a suggestion on how Tongko’s
perceived weakness in delivering results could be remedied. It was a solution, with an eye on
results, for a consistently underperforming group; its obvious intent was to save Tongko from
the result that he then failed to grasp – that he could lose even his own status as an agent,
as he in fact eventually did.
The present case must be distinguished from the second Insular Life case that showed the
hallmarks of an employer-employee relationship in the management system established.
These were: exclusivity of service, control of assignments and removal of agents under the
private respondent’s unit, and furnishing of company facilities and materials as well as capital
described as Unit Development Fund. All these are obviously absent in the present case. If
there is a commonality in these cases, it is in the collection of premiums which is a basic
authority that can be delegated to agents under the Insurance Code.
As previously discussed, what simply happened in Tongko’s case was the grant of an expanded
sales agency role that recognized him as leader amongst agents in an area that Manulife
defined. Whether this consequently resulted in the establishment of an employment
relationship can be answered by concrete evidence that corresponds to the
following questions:
 as lead agent, what were Tongko’s specific functions and the terms of his additional
engagement;
 was he paid additional compensation as a so-called Area Sales Manager, apart from
the commissions he received from the insurance sales he generated;
 what can be Manulife’s basis to terminate his status as lead agent;
 can Manulife terminate his role as lead agent separately from his agency contract; and
 to what extent does Manulife control the means and methods of Tongko’s role as lead
agent?
The answers to these questions may, to some extent, be deduced from the evidence at hand,
as partly discussed above. But strictly speaking, the questions cannot definitively and
concretely be answered through the evidence on record. The concrete evidence required to
settle these questions is simply not there, since only the Agreement and the anecdotal
affidavits have been marked and submitted as evidence.
Given this anemic state of the evidence, particularly on the requisite confluence of the factors
determinative of the existence of employer-employee relationship, the Court cannot
conclusively find that the relationship exists in the present case, even if such relationship only
refers to Tongko’s additional functions. While a rough deduction can be made, the answer will
not be fully supported by the substantial evidence needed.
Under this legal situation, the only conclusion that can be made is that the absence of evidence
showing Manulife’s control over Tongko’s contractual duties points to the absence of any
employer-employee relationship between Tongko and Manulife. In the context of the
established evidence, Tongko remained an agent all along; although his subsequent duties
made him a lead agent with leadership role, he was nevertheless only an agent whose basic
contract yields no evidence of means-and-manner control.
This conclusion renders unnecessary any further discussion of the question of whether an
agent may simultaneously assume conflicting dual personalities. But to set the record straight,
50
the concept of a single person having the dual role of agent and employee while doing the
same task is a novel one in our jurisprudence, which must be viewed with caution especially
when it is devoid of any jurisprudential support or precedent. The quoted portions in Justice
Carpio-Morales’ dissent,33 borrowed from both the Grepalife and the second Insular Life cases,
to support the duality approach of the Decision of November 7, 2008, are regrettably far
removed from their context – i.e., the cases’ factual situations, the issues they decided and
the totality of the rulings in these cases – and cannot yield the conclusions that the dissenting
opinions drew.
The Grepalife case dealt with the sole issue of whether the Ruiz brothers’ appointment as
zone supervisor and district manager made them employees of Grepalife. Indeed, because of
the presence of the element of control in their contract of engagements, they were considered
Grepalife’s employees. This did not mean, however, that they were simultaneously considered
agents as well as employees of Grepalife; the Court’s ruling never implied that this situation
existed insofar as the Ruiz brothers were concerned. The Court’s statement – the Insurance
Code may govern the licensing requirements and other particular duties of insurance agents,
but it does not bar the application of the Labor Code with regard to labor standards and labor
relations – simply means that when an insurance company has exercised control over its
agents so as to make them their employees, the relationship between the parties, which was
otherwise one for agency governed by the Civil Code and the Insurance Code, will now be
governed by the Labor Code. The reason for this is simple – the contract of agency has been
transformed into an employer-employee relationship.
The second Insular Life case, on the other hand, involved the issue of whether the labor bodies
have jurisdiction over an illegal termination dispute involving parties who had two contracts
– first, an original contract (agency contract), which was undoubtedly one for agency, and
another subsequent contract that in turn designated the agent acting unit manager (a
management contract). Both the Insular Life and the labor arbiter were one in the position
that both were agency contracts. The Court disagreed with this conclusion and held that
insofar as the management contract is concerned, the labor arbiter has jurisdiction. It is in
this light that we remanded the case to the labor arbiter for further proceedings. We never
said in this case though that the insurance agent had effectively assumed dual personalities
for the simple reason that the agency contract has been effectively superseded by the
management contract. The management contract provided that if the appointment was
terminated for any reason other than for cause, the acting unit manager would be reverted
to agent status and assigned to any unit.
The dissent pointed out, as an argument to support its employment relationship conclusion,
that any doubt in the existence of an employer-employee relationship should be resolved in
favor of the existence of the relationship.34 This observation, apparently drawn from Article 4
of the Labor Code, is misplaced, as Article 4 applies only when a doubt exists in the
"implementation and application" of the Labor Code and its implementing rules; it does not
apply where no doubt exists as in a situation where the claimant clearly failed to substantiate
his claim of employment relationship by the quantum of evidence the Labor Code requires.
On the dissent’s last point regarding the lack of jurisprudential value of our November 7, 2008
Decision, suffice it to state that, as discussed above, the Decision was not supported by the
evidence adduced and was not in accordance with controlling jurisprudence. It should,
therefore, be reconsidered and abandoned, but not in the manner the dissent suggests as the
dissenting opinions are as factually and as legally erroneous as the Decision under
reconsideration.
In light of these conclusions, the sufficiency of Tongko’s failure to comply with the guidelines
of de Dios’ letter, as a ground for termination of Tongko’s agency, is a matter that the labor
tribunals cannot rule upon in the absence of an employer-employee relationship. Jurisdiction
over the matter belongs to the courts applying the laws of insurance, agency and contracts.
WHEREFORE, considering the foregoing discussion, we REVERSE our Decision of November 7,
2008, GRANT Manulife’s motion for reconsideration and, accordingly, DISMISS Tongko’s
petition. No costs.
SO ORDERED.
G.R. No. 117040 May 4, 2000
RUBEN SERRANO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ISETANN DEPARTMENT STORE,
respondents.
RESOLUTION
MENDOZA, J.:
Respondent Isetann Department Store moves for reconsideration of the decision in this case
insofar as it is ordered to pay petitioner full backwages from the time the latter's employment
was terminated on October 11, 1991 up to the time it is determined that the termination of
employment is for an authorized cause. The motion is opposed by petitioner. The decision is
based on private respondent's failure to give petitioner a written notice of termination at least
thirty (30) days before the termination of his employment as required by Art. 283 the Labor
Code.
In support of its motion, private respondent puts forth three principal arguments, to wit: (1)
that its failure to give a written notice to petitioner at least thirty (30) days in advance in
51
accordance with Art. 283 of the Labor Code is not in issue in this case because, as a matter
of fact, it gave its employees in the affected security section thirty (30) days pay which
effectively gave them thirty (30) days notice, and petitioner accepted this form of notice
although he did not receive payment; (2) that payment of thirty (30) days pay in lieu of the
thirty (30) days prior formal notice is more advantageous to an employee because instead of
being required to work for thirty (30) days, the employee can look for another job while being
paid by the company; and (3) that in any event the new ruling announced in this case should
only be applied prospectively.
Private respondent's contentions have no merit.
First. Private respondent states that in September 1991, its employees in the security section
were called to a meeting during which they were informed that a security agency would take
over their work and that the employees would be paid "their last salaries, one month pay for
every year of service and proportionate 13th month pay"; that all affected personnel,
numbering around fifty (50), accepted the company's offer and stopped working by October
1, 1991, although they were paid their salaries up to October 31, 1991; that petitioner Ruben
Serrano said he was reserving the right to take advantage of the offer but after several months
brought this case before the Labor Arbiter's office. Private respondent claims that "petitioner
accepted the mode of notice in this case [and] never questioned it" and that "not having been
raised as an issue in the petition. . . the said notice requirement "lies outside the issues raised
by the pleadings of the parties" and should not be passed upon by this Honorable Court."
It is not true that the validity of private respondent's offer to pay thirty (30) days salary in
lieu of the thirty (30) days written notice required under Art. 283 of the Labor Code was not
raised in issue in this case. Private respondent itself raised the issue in its position paper
before the Labor Arbiter's office, thus:
. . . Respondent was, from the time of [petitioner's] separation, offering to pay
his last salary and proportionate 13th month pay less payment of his loan but
he unreasonably refused to accept it. . . .
. . . On October 11, 1991, [petitioner] together with all other employees holding
the position of Security Checker were formally terminated by the Respondent
Company on the ground of the adoption of cost saving devices. Accordingly, all
the security checkers were duly paid one month for every year of service plus
their last salaries and proportionate 13th month pay less payments for loans
obtained from the Respondent Company and other dues deductible from their
last salary. . . . [A]ll the security checkers with the sole exception of [petitioner]
herein, gladly accepted the offer and readily got what was due to them and in
turn, executed an "Affidavit of Quitclaim" manifesting their utter satisfaction to
the offer of Respondent and expressed their waiver and quitclaim for any claims
from the company. Respondent reserves the right to present such affidavits of
quitclaim at the right opportune time. After a few months, [petitioner] did not
manifest his reaction to the company's offer after he failed to appear on the
day the Respondent scheduled the giving of the separation pay and other
amounts due to them. The next time, Respondent received a word from
[petitioner] was when it received this summons. 1
Joining issue with private respondent with respect to the validity of the latter's scheme for
terminating the services of its security employees, petitioner contended before the Labor
Arbiter:
2. [Petitioner's] dismissal is patently illegal. The constitutional duty of the state
to protect the right of the laborers to security of tenure demands that an
employer may be permitted to terminate the services of an employee only
under conditions allowed by and with due process of law (Cebu Stevedoring
Co., Inc., v. Regional Director/Minister of Labor, 168 SCRA 315).
3. This doctrinal pronouncement of the Highest Tribunal was wantonly
disregarded by respondent in the instant case [a]s purely narrated by
[petitioner] in his affidavit Annex "A." He performed his work faithfully and
efficiently and he never transgressed the rules and regulations of company
during the entire period of his employment. The commendation of the Company
with regard to [petitioner's] exemplary performance are attached and marked
as Annex "G" to "G-27" respectively. However, he was verbally told and notified
by respondent[‘s] Human Resource Division Manager Teresita A. Villanueva
that his employment was terminated on October 11, 1991. . . .
Indeed, it is mandatory for an employer to accord to the supposed errant or
unwanted worker the legal requirements of written notice of the specific reason
for the retrenchment and eventual termination of complainant and he should
have been given a chance to present his side, otherwise, the worker's security
of tenure would be at the pleasure of the employer. 2
Ruling on this issue as thus defined by the parties' pleadings, the Labor Arbiter held that
petitioner "was not afforded due process. Respondent merely issued to him a dismissal letter
stating retrenchment as the sole ground for his dismissal." 3 But, as the Labor Arbiter found,
private respondent failed to prove that it was laying off employees in order to prevent or
minimize losses. Accordingly, he ruled that petitioner had been illegally dismissed and ordered
him to be reinstated and paid full backwages and other monetary benefits to which he was
entitled.
Private respondent appealed to the NLRC. Maintaining that it had complied with the notice
requirement of the law, it said in its Memorandum on Appeal:
POINT SIX. — When the [Labor Arbiter's] decision finds that [petitioner] was
not afforded due process, the Hon. Labor Arbiter failed to make distinction
52
 between termination by reason of "just causes" (Arts. 282, Labor Code) and
termination for "authorized causes" (Art. 283 and 284, Labor Code). Due
Process which is to afford an employee to explain why he should not be
terminated is only required if termination is for just cause under Art. 282 but
not [in] termination for authorized causes under Arts. 283 and 284 of the Labor
Code. Termination for authorized causes requires notice of 30 days before the
intended termination date or in lieu of notice, payment of wages for 30 days
which respondent, in the case at bar, was willing to pay the complainant. 4
The NLRC reversed the Labor Arbiter's decision not because it found that private respondent
had complied with the notice requirement but only that petitioner's employment had been
terminated for a cause authorized by law, i.e., redundancy. Accordingly, the NLRC ordered
petitioner to be given separation pay in addition to the other monetary benefits to which he
is entitled.
Indeed, the NLRC failed to address the question of whether the notice requirement in Art. 283
had been complied with. Because of this gap in the NLRC decision, this Court, in affirming the
decision, ordered the payment of full backwages to petitioner from October 11, 1991 — when
his employment was terminated without the requisite thirty (30) days written notice — until
the decision finding the termination to be for an authorized cause had become final.
There is thus no basis for private respondent's allegation that its failure to give a written
notice of termination to petitioner was never in issue and that, in awarding full backwages to
petitioner for its failure to comply with the notice requirement of Art. 283 of the Labor Code,
this court dealt "almost entirely" with a "non-issue."
In any event, this Court has authority to inquire into any question necessary in arriving at a
just decision of a case before it. 5
Second. It is contended that payment of petitioner's salary for thirty (30) days, "even when
[he is] no longer working, is effective notice and is much better than 30 days formal notice
but working until the end of the 30 day period." 6 Private respondent's letter of October 11,
1991, so it is claimed, was a mere reiteration of the oral notice previously given to petitioner
in September that effective October 1, 1991, he and his fellow security checkers would no
longer be required to work because they would be replaced by a security agency, although
they would be given their salary for the month of October 1991.
Private respondent's position has no basis in the law. The requirement to give a written notice
of termination at least thirty (30) days in advance is a requirement of the Labor Code. Art.
283 provides:
Closure of establishment and reduction of personnel. — The employer may also
terminate the employment of any employee due to the installation of labor-
saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is
for the purpose of circumventing the provisions of this Title, by serving a written
notice on the workers and the Department of Labor and Employment at least
one (1) month before the intended date thereof. In case of termination due to
the installation of labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least one (1)
month pay or to at least one (1) month pay for every year of service, whichever
is higher. In case of retrenchment to prevent losses and in cases of closure or
cessation of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equivalent to
one (1) month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year. (Emphasis added).
As pointed out in Sebuguero v. National Labor Relations Conmission: 7
. . . [W]hat the law requires is a written notice to the employees concerned and
that requirement is mandatory. The notice must also be given at least one
month in advance of the intended date of retrenchment to enable the
employees to look for other means of employment and therefore to ease the
impact of the loss of their jobs and the corresponding income.
Nothing in the law gives private respondent the option to substitute the required prior written
notice with payment of thirty (30) days salary. It is not for private respondent to make
substitutions for a right that a worker is legally entitled to. For instance, as held in Farmanlis
Farms, Inc. v. Minister of
Labor, 8 under the law, benefits in the form of food or free electricity, assuming they were
given, were not a proper substitute for the 13th month pay required by law.
Indeed, a job is more than the salary that it carries. Payment of thirty (30) days salary cannot
compensate for the psychological effect or the stigma of immediately finding one's self laid
off from work. It cannot be a fully effective substitute for the thirty (30) days written notice
required by law especially when, as in this case, the fact is that no notice was given to the
Department of Labor and Employment (DOLE).
Besides, as we held in our decision in this case, 9 the purpose of such previous notice is to
give the employee some time to prepare for the eventual loss of his job as well as the DOLE
the opportunity to ascertain the verity of the alleged authorized cause of termination. Such
purpose would not be served by the simple expedient of paying thirty (30) days salary in lieu
of notice of an employee's impending dismissal, as by then the loss of employment would
have been a fait accompli.
53
Private respondent nevertheless claims that payment of thirty (30) days salary in lieu of
written notice given thirty (30) days before the termination of employment is in accordance
with our ruling in Associated Labor Unions-VIMCONTU v. NLRC. 10
This claim will not bear analysis. In that case, the employees and the then Ministry of Labor
and Employment (MOLE) were notified in writing on August 5, 1983 that the employees'
services would cease on August 31, 1983 but that they would be paid their salaries and other
benefits until September 5, 1983. It was held that such written notice was "more than
substantial compliance" with the notice requirement of the Labor Code.
Indeed, there was "more than substantial compliance" with the law in that case because, in
addition to the advance written notice required under Art. 284 (now Art. 283) of the Labor
Code, the employees were paid for five days, from September 1 to 5, 1993, even if they
rendered no service for the period. But, in the case at bar, there was no written notice given
to petitioner at least thirty (30) days before the termination of his employment. Had private
respondent given a written notice to petitioner on October 1, 1991, at the latest, that effective
October 31, 1991 his employment would cease although from October 1 he would no longer
be required to work, there would be basis for private respondent's boast that "[payment] of
this salary even [if he is] no longer working is effective notice and is much better than 30
days formal notice but working until the end of the 30 days period." This is not the case here,
however. What happened here was that on October 11, 1991, petitioner was given a
memorandum terminating his employment effective on the same day on the ground of
retrenchment (actually redundancy).
Third. It is contended that private respondent's non-observance of the notice requirement
should not be visited with a severe consequence in accordance with Art. III, §19(1) of the
Constitution. The contention is without merit. In the first place, Art. III, §19(1) of the
Constitution, prohibiting the imposition of excessive fines, applies only to criminal
prosecutions. In the second place, the decision in this case, providing for the payment of full
backwages for failure of an employer to give notice, seeks to vindicate the employee's right
to notice before he is dismissed or laid off, while recognizing the right of the employer to
dismiss for any of the just causes enumerated in Art. 282 or to terminate employment for any
of the authorized causes mentioned in Arts. 283-284. 11 The order to pay full backwages is
a consequence of the employer's action in dismissing an employee without notice which makes
said dismissal ineffectual. 12 The employee is considered not to have been terminated from
his employment until it is finally determined that his dismissal/termination of employment
was for cause and, therefore, he should be paid his salaries in the interim. This eliminates
guesswork in determining the degree of prejudice suffered by an employee dismissed with
cause but without notice since the penalty is measured by the salary he failed to earn on
account of his dismissal/termination of employment.
Fourth. Private respondent finally contends that, in any event, the new doctrine announced
in this case should only be applied prospectively. Private respondent invokes the ruling in
Columbia Pictures, Inc. v. Court of Appeals 1 that —
[While] a judicial interpretation becomes a part of the law as of the date that
law was originally passed, [this is] subject to the qualification that when a
doctrine of this Court is overruled and a different view is adopted, and more so
when there is a reversal thereof, the new doctrine should be applied
prospectively and should not apply to parties who relied on the old doctrine and
acted in good faith. To hold otherwise would be to deprive the law of its quality
of fairness and justice then, if there is no recognition of what had transpired
prior to such adjudication.
It is apparent that private respondent misconceived the import of the ruling. The decision in
Columbia Pictures does not mean that if a new rule is laid down in a case, it should not be
applied in that case but that said rule should apply prospectively to cases arising afterwards.
Private respondent's view of the principle of prospective application of new judicial doctrines
would turn the judicial function into a mere academic exercise with the result that the doctrine
laid down would be no more than a dictum and would deprive the holding in the case of any
force.
Indeed, when the Court formulated the Wenphil doctrine, 14 which we reverse in this case,
the Court did not defer application of the rule laid down imposing a fine on the employer for
failure to give notice in a case of dismissal for cause. To the contrary, the new rule was applied
right then and there. For that matter, in 20th Century Fox Film Corp. v. Court of Appeals 15
the Court laid down the rule that in determining the existence of probable cause for the
issuance of a search warrant in copyright infringement cases, the court must require the
production of the master tapes of copyrighted films in order to compare them with the
"pirated" copies. The new rule was applied in opinion of the Court written by Justice Hugo E.
Gutierrez, Jr. in the very same case of 20th Century Fox in which the new requirement was
laid down. Where the new rule was held to be prospective in application was in Columbia
Pictures and that was because at the time the search warrant in that case was issued, the
new standard had not yet been announced so it would be unreasonable to expect the judge
issuing the search warrant to apply a rule that had not been announced at the time.
A good illustration of the scope of overruling decisions is People v. Mapa, 16 where the accused
was charged with illegal possession of firearms. The accused invoked the ruling in an earlier
case 17 that appointment as a secret agent of a provincial governor to assist in the
maintenance of peace and order sufficiently put the appointee in the category of a "peace
officer" equal to a member of the municipal police authorized under §879 of the Administrative
Code of 1917 to carry firearms. The Court rejected the accused's contention and overruled
the prior decision in People v. Macarandang on the ground that §879 of the Administrative
Code of 1917 was explicit and only those expressly mentioned therein were entitled to possess
firearms. Since secret agents were not among those mentioned, they were not authorized to
possess firearms.
Although in People v. Jabinal 18 the Court refused to give retro active effect to its decision in
Mapa, because the new doctrine "should not apply to parties who had relied on the old doctrine
54
and acted in good faith thereon" and, for this reason, it acquitted the accused of illegal WHEREFORE, premises considered, We find the termination of the complainants illegal.
possession of firearms, nonetheless it applied the new ruling (that secret agents of provincial Accordingly, respondent is hereby ordered to pay them their backwages up to
governors were not authorized to possess firearms) in the very case in which the new rule November 29, 1999 in the sum of:
was announced and convicted the accused.
1. Jenny M. Agabon - P56, 231.93
In the case at bar, since private respondent does not even claim that it has relied in good
faith on the former doctrine of Wenphil and its progeny Sebuguero v. NLRC, there is no reason 2. Virgilio C. Agabon - 56, 231.93
not to apply the new standard to this case.
and, in lieu of reinstatement to pay them their separation pay of one (1) month for
WHEREFORE, private respondent's motion for reconsideration is DENIED with finality for lack every year of service from date of hiring up to November 29, 1999.
of merit.
Respondent is further ordered to pay the complainants their holiday pay and service
SO ORDERED. incentive leave pay for the years 1996, 1997 and 1998 as well as their premium pay
for holidays and rest days and Virgilio Agabon's 13th month pay differential amounting
G.R. No. 158693 November 17, 2004 to TWO THOUSAND ONE HUNDRED FIFTY (P2,150.00) Pesos, or the aggregate amount
of ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY EIGHT & 93/100
JENNY M. AGABON and VIRGILIO C. AGABON, petitioners, (P121,678.93) Pesos for Jenny Agabon, and ONE HUNDRED TWENTY THREE
vs. THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100 (P123,828.93) Pesos for
NATIONAL LABOR RELATIONS COMMISSION (NLRC), RIVIERA HOME Virgilio Agabon, as per attached computation of Julieta C. Nicolas, OIC, Research and
IMPROVEMENTS, INC. and VICENTE ANGELES, respondents. Computation Unit, NCR.

SO ORDERED.4

DECISION On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had
abandoned their work, and were not entitled to backwages and separation pay. The other
money claims awarded by the Labor Arbiter were also denied for lack of evidence.5

YNARES-SANTIAGO, J.:
This petition for review seeks to reverse the decision1 of the Court of Appeals dated January
23, 2003, in CA-G.R. SP No. 63017, modifying the decision of National Labor Relations
Commission (NLRC) in NLRC-NCR Case No. 023442-00.
Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling
and installing ornamental and construction materials. It employed petitioners Virgilio Agabon
and Jenny Agabon as gypsum board and cornice installers on January 2, 19922 until February
23, 1999 when they were dismissed for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of money claims3 and on
December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and
ordered private respondent to pay the monetary claims. The dispositive portion of the decision
states:
Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with
the Court of Appeals.
The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because
they had abandoned their employment but ordered the payment of money claims. The
dispositive portion of the decision reads:
WHEREFORE, the decision of the National Labor Relations Commission is REVERSED
only insofar as it dismissed petitioner's money claims. Private respondents are ordered
to pay petitioners holiday pay for four (4) regular holidays in 1996, 1997, and 1998,
as well as their service incentive leave pay for said years, and to pay the balance of
petitioner Virgilio Agabon's 13th month pay for 1998 in the amount of P2,150.00.
SO ORDERED.6

55
Hence, this petition for review on the sole issue of whether petitioners were illegally
dismissed.7
Petitioners assert that they were dismissed because the private respondent refused to give
them assignments unless they agreed to work on a "pakyaw" basis when they reported for
duty on February 23, 1999. They did not agree on this arrangement because it would mean
losing benefits as Social Security System (SSS) members. Petitioners also claim that private
respondent did not comply with the twin requirements of notice and hearing.8
Private respondent, on the other hand, maintained that petitioners were not dismissed but
had abandoned their work.9 In fact, private respondent sent two letters to the last known
addresses of the petitioners advising them to report for work. Private respondent's manager
even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him
about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice
installation work. However, petitioners did not report for work because they had
subcontracted to perform installation work for another company. Petitioners also demanded
for an increase in their wage to P280.00 per day. When this was not granted, petitioners
stopped reporting for work and filed the illegal dismissal case.10
It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not
only respect but even finality if the findings are supported by substantial evidence. This is
especially so when such findings were affirmed by the Court of Appeals.11 However, if the
factual findings of the NLRC and the Labor Arbiter are conflicting, as in this case, the reviewing
court may delve into the records and examine for itself the questioned findings.12
Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners'
dismissal was for a just cause. They had abandoned their employment and were already
working for another employer.
To dismiss an employee, the law requires not only the existence of a just and valid cause but
also enjoins the employer to give the employee the opportunity to be heard and to defend
himself.13 Article 282 of the Labor Code enumerates the just causes for termination by the
employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or the latter's representative in connection with the employee's work; (b)
gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the
employee of the trust reposed in him by his employer or his duly authorized representative;
(d) commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representative; and (e) other
causes analogous to the foregoing.
Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment.14 It is a form of neglect of duty, hence, a just cause for termination of
employment by the employer.15 For a valid finding of abandonment, these two factors should
be present: (1) the failure to report for work or absence without valid or justifiable reason;
and (2) a clear intention to sever employer-employee relationship, with the second as the
more determinative factor which is manifested by overt acts from which it may be deduced
that the employees has no more intention to work. The intent to discontinue the employment
must be shown by clear proof that it was deliberate and unjustified.16
In February 1999, petitioners were frequently absent having subcontracted for an installation
work for another company. Subcontracting for another company clearly showed the intention
to sever the employer-employee relationship with private respondent. This was not the first
time they did this. In January 1996, they did not report for work because they were working
for another company. Private respondent at that time warned petitioners that they would be
dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear
intention to sever their employer-employee relationship. The record of an employee is a
relevant consideration in determining the penalty that should be meted out to him.17
In Sandoval Shipyard v. Clave,18 we held that an employee who deliberately absented from
work without leave or permission from his employer, for the purpose of looking for a job
elsewhere, is considered to have abandoned his job. We should apply that rule with more
reason here where petitioners were absent because they were already working in another
company.
The law imposes many obligations on the employer such as providing just compensation to
workers, observance of the procedural requirements of notice and hearing in the termination
of employment. On the other hand, the law also recognizes the right of the employer to expect
from its workers not only good performance, adequate work and diligence, but also good
conduct19 and loyalty. The employer may not be compelled to continue to employ such
persons whose continuance in the service will patently be inimical to his interests.20
After establishing that the terminations were for a just and valid cause, we now determine if
the procedures for dismissal were observed.
The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the
Omnibus Rules Implementing the Labor Code:
Standards of due process: requirements of notice. – In all cases of termination of
employment, the following standards of due process shall be substantially observed:
I. For termination of employment based on just causes as defined in Article 282 of the
Code:
(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side;
56
 (b) A hearing or conference during which the employee concerned, with the assistance
of counsel if the employee so desires, is given opportunity to respond to the charge,
present his evidence or rebut the evidence presented against him; and
(c) A written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.
In case of termination, the foregoing notices shall be served on the employee's last
known address.
Dismissals based on just causes contemplate acts or omissions attributable to the employee
while dismissals based on authorized causes involve grounds under the Labor Code which
allow the employer to terminate employees. A termination for an authorized cause requires
payment of separation pay. When the termination of employment is declared illegal,
reinstatement and full backwages are mandated under Article 279. If reinstatement is no
longer possible where the dismissal was unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer
must give the employee two written notices and a hearing or opportunity to be heard if
requested by the employee before terminating the employment: a notice specifying the
grounds for which dismissal is sought a hearing or an opportunity to be heard and after
hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal
is based on authorized causes under Articles 283 and 284, the employer must give the
employee and the Department of Labor and Employment written notices 30 days prior to the
effectivity of his separation.
From the foregoing rules four possible situations may be derived: (1) the dismissal is for a
just cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or
for health reasons under Article 284, and due process was observed; (2) the dismissal is
without just or authorized cause but due process was observed; (3) the dismissal is without
just or authorized cause and there was no due process; and (4) the dismissal is for just or
authorized cause but due process was not observed.
In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any
liability.
In the second and third situations where the dismissals are illegal, Article 279 mandates that
the employee is entitled to reinstatement without loss of seniority rights and other privileges
and full backwages, inclusive of allowances, and other benefits or their monetary equivalent
computed from the time the compensation was not paid up to the time of actual
reinstatement.
In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot
be cured, it should not invalidate the dismissal. However, the employer should be held liable
for non-compliance with the procedural requirements of due process.
The present case squarely falls under the fourth situation. The dismissal should be upheld
because it was established that the petitioners abandoned their jobs to work for another
company. Private respondent, however, did not follow the notice requirements and instead
argued that sending notices to the last known addresses would have been useless because
they did not reside there anymore. Unfortunately for the private respondent, this is not a valid
excuse because the law mandates the twin notice requirements to the employee's last known
address.21 Thus, it should be held liable for non-compliance with the procedural requirements
of due process.
A review and re-examination of the relevant legal principles is appropriate and timely to clarify
the various rulings on employment termination in the light of Serrano v. National Labor
Relations Commission.22
Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not
given any notice. In the 1989 case of Wenphil Corp. v. National Labor Relations
Commission,23 we reversed this long-standing rule and held that the dismissed employee,
although not given any notice and hearing, was not entitled to reinstatement and backwages
because the dismissal was for grave misconduct and insubordination, a just ground for
termination under Article 282. The employee had a violent temper and caused trouble during
office hours, defying superiors who tried to pacify him. We concluded that reinstating the
employee and awarding backwages "may encourage him to do even worse and will render a
mockery of the rules of discipline that employees are required to observe."24 We further held
that:
Under the circumstances, the dismissal of the private respondent for just cause should
be maintained. He has no right to return to his former employment.
However, the petitioner must nevertheless be held to account for failure to extend to
private respondent his right to an investigation before causing his dismissal. The rule
is explicit as above discussed. The dismissal of an employee must be for just or
authorized cause and after due process. Petitioner committed an infraction of the
second requirement. Thus, it must be imposed a sanction for its failure to give a formal
notice and conduct an investigation as required by law before dismissing petitioner
from employment. Considering the circumstances of this case petitioner must
indemnify the private respondent the amount of P1,000.00. The measure of this award
depends on the facts of each case and the gravity of the omission committed by the
employer.25
The rule thus evolved: where the employer had a valid reason to dismiss an employee but
did not follow the due process requirement, the dismissal may be upheld but the employer
57
will be penalized to pay an indemnity to the employee. This became known as the Wenphil or
Belated Due Process Rule.
On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We
held that the violation by the employer of the notice requirement in termination for just or
authorized causes was not a denial of due process that will nullify the termination. However,
the dismissal is ineffectual and the employer must pay full backwages from the time of
termination until it is judicially declared that the dismissal was for a just or authorized cause.
The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant
number of cases involving dismissals without requisite notices. We concluded that the
imposition of penalty by way of damages for violation of the notice requirement was not
serving as a deterrent. Hence, we now required payment of full backwages from the time of
dismissal until the time the Court finds the dismissal was for a just or authorized cause.
Serrano was confronting the practice of employers to "dismiss now and pay later" by imposing
full backwages.
We believe, however, that the ruling in Serrano did not consider the full meaning of Article
279 of the Labor Code which states:
ART. 279. Security of Tenure. – In cases of regular employment, the employer shall
not terminate the services of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.
This means that the termination is illegal only if it is not for any of the justified or authorized
causes provided by law. Payment of backwages and other benefits, including reinstatement,
is justified only if the employee was unjustly dismissed.
The fact that the Serrano ruling can cause unfairness and injustice which elicited strong
dissent has prompted us to revisit the doctrine.
To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a
system of rights based on moral principles so deeply imbedded in the traditions and feelings
of our people as to be deemed fundamental to a civilized society as conceived by our entire
history. Due process is that which comports with the deepest notions of what is fair and right
and just.26 It is a constitutional restraint on the legislative as well as on the executive and
judicial powers of the government provided by the Bill of Rights.
Due process under the Labor Code, like Constitutional due process, has two aspects:
substantive, i.e., the valid and authorized causes of employment termination under the Labor
Code; and procedural, i.e., the manner of dismissal. Procedural due process requirements for
dismissal are found in the Implementing Rules of P.D. 442, as amended, otherwise known as
the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order
Nos. 9 and 10.27 Breaches of these due process requirements violate the Labor Code.
Therefore statutory due process should be differentiated from failure to comply with
constitutional due process.
Constitutional due process protects the individual from the government and assures him of
his rights in criminal, civil or administrative proceedings; while statutory due process found
in the Labor Code and Implementing Rules protects employees from being unjustly terminated
without just cause after notice and hearing.
In Sebuguero v. National Labor Relations Commission,28 the dismissal was for a just and
valid cause but the employee was not accorded due process. The dismissal was upheld by the
Court but the employer was sanctioned. The sanction should be in the nature of
indemnification or penalty, and depends on the facts of each case and the gravity of the
omission committed by the employer.
In Nath v. National Labor Relations Commission,29 it was ruled that even if the employee was
not given due process, the failure did not operate to eradicate the just causes for dismissal.
The dismissal being for just cause, albeit without due process, did not entitle the employee
to reinstatement, backwages, damages and attorney's fees.
Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National
Labor Relations Commission,30 which opinion he reiterated in Serrano, stated:
C. Where there is just cause for dismissal but due process has not been properly
observed by an employer, it would not be right to order either the reinstatement of
the dismissed employee or the payment of backwages to him. In failing, however, to
comply with the procedure prescribed by law in terminating the services of the
employee, the employer must be deemed to have opted or, in any case, should be
made liable, for the payment of separation pay. It might be pointed out that the notice
to be given and the hearing to be conducted generally constitute the two-part due
process requirement of law to be accorded to the employee by the employer.
Nevertheless, peculiar circumstances might obtain in certain situations where to
undertake the above steps would be no more than a useless formality and where,
accordingly, it would not be imprudent to apply the res ipsa loquitur rule and award,
in lieu of separation pay, nominal damages to the employee. x x x.31
After carefully analyzing the consequences of the divergent doctrines in the law on
employment termination, we believe that in cases involving dismissals for cause but without
observance of the twin requirements of notice and hearing, the better rule is to abandon the
58
Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause but
imposing sanctions on the employer. Such sanctions, however, must be stiffer than that
imposed in Wenphil. By doing so, this Court would be able to achieve a fair result by
dispensing justice not just to employees, but to employers as well.
The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but
not complying with statutory due process may have far-reaching consequences.
This would encourage frivolous suits, where even the most notorious violators of company
policy are rewarded by invoking due process. This also creates absurd situations where there
is a just or authorized cause for dismissal but a procedural infirmity invalidates the
termination. Let us take for example a case where the employee is caught stealing or
threatens the lives of his co-employees or has become a criminal, who has fled and cannot
be found, or where serious business losses demand that operations be ceased in less than a
month. Invalidating the dismissal would not serve public interest. It could also discourage
investments that can generate employment in the local economy.
The constitutional policy to provide full protection to labor is not meant to be a sword to
oppress employers. The commitment of this Court to the cause of labor does not prevent us
from sustaining the employer when it is in the right, as in this case.32 Certainly, an employer
should not be compelled to pay employees for work not actually performed and in fact
abandoned.
The employer should not be compelled to continue employing a person who is admittedly
guilty of misfeasance or malfeasance and whose continued employment is patently inimical
to the employer. The law protecting the rights of the laborer authorizes neither oppression
nor self-destruction of the employer.33
It must be stressed that in the present case, the petitioners committed a grave offense, i.e.,
abandonment, which, if the requirements of due process were complied with, would
undoubtedly result in a valid dismissal.
An employee who is clearly guilty of conduct violative of Article 282 should not be protected
by the Social Justice Clause of the Constitution. Social justice, as the term suggests, should
be used only to correct an injustice. As the eminent Justice Jose P. Laurel observed, social
justice must be founded on the recognition of the necessity of interdependence among diverse
units of a society and of the protection that should be equally and evenly extended to all
groups as a combined force in our social and economic life, consistent with the fundamental
and paramount objective of the state of promoting the health, comfort, and quiet of all
persons, and of bringing about "the greatest good to the greatest number."34
This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano
and related cases. Social justice is not based on rigid formulas set in stone. It has to allow for
changing times and circumstances.
Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-
management relations and dispense justice with an even hand in every case:
We have repeatedly stressed that social justice – or any justice for that matter – is for
the deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It
is true that, in case of reasonable doubt, we are to tilt the balance in favor of the poor
to whom the Constitution fittingly extends its sympathy and compassion. But never is
it justified to give preference to the poor simply because they are poor, or reject the
rich simply because they are rich, for justice must always be served for the poor and
the rich alike, according to the mandate of the law.35
Justice in every case should only be for the deserving party. It should not be presumed that
every case of illegal dismissal would automatically be decided in favor of labor, as
management has rights that should be fully respected and enforced by this Court. As
interdependent and indispensable partners in nation-building, labor and management need
each other to foster productivity and economic growth; hence, the need to weigh and balance
the rights and welfare of both the employee and employer.
Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process
should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer
should indemnify the employee for the violation of his statutory rights, as ruled in Reta v.
National Labor Relations Commission.36 The indemnity to be imposed should be stiffer to
discourage the abhorrent practice of "dismiss now, pay later," which we sought to deter in
the Serrano ruling. The sanction should be in the nature of indemnification or penalty and
should depend on the facts of each case, taking into special consideration the gravity of the
due process violation of the employer.
Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or recognized, and
not for the purpose of indemnifying the plaintiff for any loss suffered by him.37
As enunciated by this Court in Viernes v. National Labor Relations Commissions,38 an
employer is liable to pay indemnity in the form of nominal damages to an employee who has
been dismissed if, in effecting such dismissal, the employer fails to comply with the
requirements of due process. The Court, after considering the circumstances therein, fixed
the indemnity at P2,590.50, which was equivalent to the employee's one month salary. This
indemnity is intended not to penalize the employer but to vindicate or recognize the
employee's right to statutory due process which was violated by the employer.39
The violation of the petitioners' right to statutory due process by the private respondent
warrants the payment of indemnity in the form of nominal damages. The amount of such
damages is addressed to the sound discretion of the court, taking into account the relevant
circumstances.40 Considering the prevailing circumstances in the case at bar, we deem it
proper to fix it at P30,000.00. We believe this form of damages would serve to deter
59
employers from future violations of the statutory due process rights of employees. At the very
least, it provides a vindication or recognition of this fundamental right granted to the latter
under the Labor Code and its Implementing Rules.
Private respondent claims that the Court of Appeals erred in holding that it failed to pay
petitioners' holiday pay, service incentive leave pay and 13th month pay.
We are not persuaded.
We affirm the ruling of the appellate court on petitioners' money claims. Private respondent
is liable for petitioners' holiday pay, service incentive leave pay and 13th month pay without
deductions.
As a general rule, one who pleads payment has the burden of proving it. Even where the
employee must allege non-payment, the general rule is that the burden rests on the employer
to prove payment, rather than on the employee to prove non-payment. The reason for the
rule is that the pertinent personnel files, payrolls, records, remittances and other similar
documents – which will show that overtime, differentials, service incentive leave and other
claims of workers have been paid – are not in the possession of the worker but in the custody
and absolute control of the employer.41
In the case at bar, if private respondent indeed paid petitioners' holiday pay and service
incentive leave pay, it could have easily presented documentary proofs of such monetary
benefits to disprove the claims of the petitioners. But it did not, except with respect to the
13th month pay wherein it presented cash vouchers showing payments of the benefit in the
years disputed.42 Allegations by private respondent that it does not operate during holidays
and that it allows its employees 10 days leave with pay, other than being self-serving, do not
constitute proof of payment. Consequently, it failed to discharge the onus probandi thereby
making it liable for such claims to the petitioners.
Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabon's
13th month pay, we find the same to be unauthorized. The evident intention of Presidential
Decree No. 851 is to grant an additional income in the form of the 13th month pay to
employees not already receiving the same43 so as "to further protect the level of real wages
from the ravages of world-wide inflation."44 Clearly, as additional income, the 13th month
pay is included in the definition of wage under Article 97(f) of the Labor Code, to wit:
(f) "Wage" paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money whether fixed or ascertained
on a time, task, piece , or commission basis, or other method of calculating the same,
which is payable by an employer to an employee under a written or unwritten contract
of employment for work done or to be done, or for services rendered or to be rendered
and includes the fair and reasonable value, as determined by the Secretary of Labor,
of board, lodging, or other facilities customarily furnished by the employer to the
employee…"
from which an employer is prohibited under Article 11345 of the same Code from making any
deductions without the employee's knowledge and consent. In the instant case, private
respondent failed to show that the deduction of the SSS loan and the value of the shoes from
petitioner Virgilio Agabon's 13th month pay was authorized by the latter. The lack of authority
to deduct is further bolstered by the fact that petitioner Virgilio Agabon included the same as
one of his money claims against private respondent.
The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter
ordering the private respondent to pay each of the petitioners holiday pay for four regular
holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the
same period in the amount of P3,255.00 and the balance of Virgilio Agabon's thirteenth month
pay for 1998 in the amount of P2,150.00.
WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of
Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, finding that petitioners' Jenny and
Virgilio Agabon abandoned their work, and ordering private respondent to pay each of the
petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of
P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and
the balance of Virgilio Agabon's thirteenth month pay for 1998 in the amount of P2,150.00 is
AFFIRMED with the MODIFICATION that private respondent Riviera Home Improvements,
Inc. is further ORDERED to pay each of the petitioners the amount of P30,000.00 as nominal
damages for non-compliance with statutory due process.
No costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio, Austria-
Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, Tinga, Chico-Nazario, and Garcia, JJ.,
concur.
SEPARATE OPINION
TINGA, J:
I concur in the result, the final disposition of the petition being correct. There is no denying
the importance of the Court's ruling today, which should be considered as definitive as to the
effect of the failure to render the notice and hearing required under the Labor Code when an
60
employee is being dismissed for just causes, as defined under the same law. The Court
emphatically reaffirms the rule that dismissals for just cause are not invalidated due to the
failure of the employer to observe the proper notice and hearing requirements under the
Labor Code. At the same time, The Decision likewise establishes that the Civil Code provisions
on damages serve as the proper framework for the appropriate relief to the employee
dismissed for just cause if the notice-hearing requirement is not met. Serrano v. NLRC,1
insofar as it is controlling in dismissals for unauthorized causes, is no longer the controlling
precedent. Any and all previous rulings and statements of the Court inconsistent with these
determinations are now deemed inoperative.
My views on the questions raised in this petition are comprehensive, if I may so in all modesty.
I offer this opinion to discuss the reasoning behind my conclusions, pertaining as they do to
questions of fundamental importance.
Prologue
The factual backdrop of the present Petition for Review is not novel. Petitioners claim that
they were illegally dismissed by the respondents, who allege in turn that petitioners had
actually abandoned their employment. There is little difficulty in upholding the findings of the
NRLC and the Court of Appeals that petitioners are guilty of abandonment, one of the just
causes for termination under the Labor Code. Yet, the records also show that the employer
was remiss in not giving the notice required by the Labor Code; hence, the resultant
controversy as to the legal effect of such failure vis-à-vis the warranted dismissal.
Ostensibly, the matter has been settled by our decision in Serrano2, wherein the Court ruled
that the failure to properly observe the notice requirement did not render the dismissal,
whether for just or authorized causes, null and void, for such violation was not a denial of the
constitutional right to due process, and that the measure of appropriate damages in such
cases ought to be the amount of wages the employee should have received were it not for
the termination of his employment without prior notice. 3 Still, the Court has, for good reason,
opted to reexamine the so-called Serrano doctrine through the present petition
Antecedent Facts
Respondent Riviera Home Improvements, Inc (Riviera Home) is engaged in the manufacture
and installation of gypsum board and cornice. In January of 1992, the Agabons were hired in
January of 1992 as cornice installers by Riviera Home. According to their personnel file with
Riviera Home, the Agabon given address was 3RDS Tailoring, E. Rodriguez Ave., Moonwalk
Subdivision, P-II Parañaque City, Metro Manila.4
It is not disputed that sometime around February 1999, the Agabons stopped rendering
services for Riviera Home. The Agabons allege that beginning on 23 February 1999, they
stopped receiving assignments from Riviera Home.5 When they demanded an explanation,
the manager of Riviera Homes, Marivic Ventura, informed them that they would be hired
again, but on a "pakyaw" (piece-work) basis. When the Agabons spurned this proposal,
Riviera Homes refused to continue their employment under the original terms and
agreement.6 Taking affront, the Agabons filed a complaint for illegal dismissal with the
National Labor Relations Commission ("NLRC").
Riviera Homes adverts to a different version of events leading to the filing of the complaint
for illegal dismissal. It alleged that in the early quarter of 1999, the Agabons stopped reporting
for work with Riviera. Two separate letters dated 10 March 1999, were sent to the Agabons
at the address indicated in their personnel file. In these notices, the Agabons were directed
to report for work immediately.7 However, these notices were returned unserved with the
notation "RTS Moved." Then, in June of 1999, Virgilio Agabon informed Riviera Homes by
telephone that he and Jenny Agabon were ready to return to work for Riviera Homes, on the
condition that their wages be first adjusted. On 18 June 1999, the Agabons went to Riviera
Homes, and in a meeting with management, requested a wage increase of up to Two Hundred
Eighty Pesos (P280.00) a day. When no affirmative response was offered by Riviera Homes,
the Agabons initiated the complaint before the NLRC. 8
In their Position Paper, the Agabons likewise alleged that they were required to work even on
holidays and rest days, but were never paid the legal holiday pay or the premium pay for
holiday or rest day. They also asserted that they were denied Service Incentive Leave pay,
and that Virgilio Agabon was not given his thirteenth (13th) month pay for the year 1998. 9
After due deliberation, Labor Arbiter Daisy G. Cauton-Barcelona rendered a Decision dated 28
December 1999, finding the termination of the Agabons illegal, and ordering Riviera Homes
to pay backwages in the sum of Fifty Six Thousand Two Hundred Thirty One Pesos and Ninety
Three Centavos (P56,231.93) each. The Labor Arbiter likewise ordered, in lieu of
reinstatement, the payment of separation pay of one (1) month pay for every year of service
from date of hiring up to 29 November 1999, as well as the payment of holiday pay, service
incentive leave pay, and premium pay for holiday and restday, plus thirteenth (13 th) month
differential to Virgilio Agabon.10
In so ruling, the Labor Arbiter declared that Riviera Homes was unable to satisfactorily refute
the Agabons' claim that they were no longer given work to do after 23 February 1999 and
that their rehiring was only on "pakyaw" basis. The Labor Arbiter also held that Riviera Homes
failed to comply with the notice requirement, noting that Riviera Homes well knew of the
change of address of the Agabons, considering that the identification cards it issued stated a
different address from that on the personnel file.11 The Labor Arbiter asserted the principle
that in all termination cases, strict compliance by the employer with the demands of
procedural and substantive due process is a condition sine qua non for the same to be declared
valid.12
On appeal, the NLRC Second Division set aside the Labor Arbiter's Decision and ordered the
dismissal of the complaint for lack of merit.13 The NLRC held that the Agabons were not able
to refute the assertion that for the payroll period ending on 15 February 1999, Virgilio and
61
Jenny Agabon worked for only two and one-half (2½) and three (3) days, respectively. It
disputed the earlier finding that Riviera Homes had known of the change in address, noting
that the address indicated in the
identification cards was not the Agabons, but that of the persons who should be notified in
case of emergency concerning the employee.14 Thus, proper service of the notice was deemed
to have been accomplished. Further, the notices evinced good reason to believe that the
Agabons had not been dismissed, but had instead abandoned their jobs by refusing to report
for work.
In support of its conclusion that the Agabons had abandoned their work, the NLRC also
observed that the Agabons did not seek reinstatement, but only separation pay. While the
choice of relief was premised by the Agabons on their purported strained relations with Riviera
Homes, the NLRC pointed out that such claim was amply belied by the fact that the Agabons
had actually sought a conference with Riviera Homes in June of 1999. The NLRC likewise
found that the failure of the Labor Arbiter to justify the award of extraneous money claims,
such as holiday and service incentive leave pay, confirmed that there was no proof to justify
such claims.
A Petition for Certiorari was promptly filed with the Court of Appeals by the Agabons, imputing
grave abuse of discretion on the part of the NLRC in dismissing their complaint for illegal
dismissal. In a Decision15 dated 23 January 2003, the Court of Appeals affirmed the finding
that the Agabons had abandoned their employment. It noted that the two elements
constituting abandonment had been established, to wit: the failure to report for work or
absence without valid justifiable reason, and; a clear intention to sever the employer-
employee relationship. The intent to sever the employer-employee relationship was
buttressed by the Agabon's choice to seek not reinstatement, but separation pay. The Court
of Appeals likewise found that the service of the notices were valid, as the Agabons did not
notify Riviera Homes of their change of address, and thus the failure to return to work despite
notice amounted to abandonment of work.
However, the Court of Appeals reversed the NLRC as regards the denial of the claims for
holiday pay, service incentive leave pay, and the balance of Virgilio Agabon's thirteenth (13th)
month pay. It ruled that the failure to adduce proof in support thereof was not fatal and that
the burden of proving that such benefits had already been paid rested on Riviera Homes. 16
Given that Riviera Homes failed to present proof of payment to the Agabons of their holiday
pay and service incentive leave pay for the years 1996, 1997 and 1998, the Court of Appeals
chose to believe that such benefits had not actually been received by the employees. It also
ruled that the apparent deductions made by Riviera Homes on the thirteenth (13th) month
pay of Virgilio Agabon violated Section 10 of the Rules and Regulations Implementing
Presidential Decree No. 851.17 Accordingly, Riviera Homes was ordered to pay the Agabons
holiday for four (4) regular holidays in 1996, 1997 and 1998, as well as their service incentive
leave pay for said years, and the balance of Virgilio Agabon's thirteenth (13th) month pay for
1998 in the amount of Two Thousand One Hundred Fifty Pesos (P2,150.00).18
In their Petition for Review, the Agabons claim that they had been illegally dismissed,
reasserting their version of events, thus: (1) that they had not been given new assignments
since 23 February 1999; (2) that they were told that they would only be re-hired on a
"pakyaw" basis, and; (3) that Riviera Homes had knowingly sent the notices to their old
address despite its knowledge of their change of address as indicated in the identification
cards.19 Further, the Agabons note that only one notice was sent to each of them, in violation
of the rule that the employer must furnish two written notices before termination — the first
to apprise the employee of the cause for which dismissal is sought, and the second to notify
the employee of the decision of dismissal.20 The Agabons likewise maintain that they did not
seek reinstatement owing to the strained relations between them and Riviera Homes.
The Agabons present to this Court only one issue, i.e.: whether or not they were illegally
dismissed from their employment.21 There are several dimensions though to this issue which
warrant full consideration.
The Abandonment Dimension
Review of Factual Finding of Abandonment
As the Decision points out, abandonment is characterized by the failure to report for work or
absence without valid or justifiable reason, and a clear intention to sever the employer-
employee relationship. The question of whether or not an employee has abandoned
employment is essentially a factual issue.22 The NLRC and the Court of Appeals, both
appropriate triers of fact, concluded that the Agabons had actually abandoned their
employment, thus there is little need for deep inquiry into the correctness of this factual
finding. There is no doubt that the Agabons stopped reporting for work sometime in February
of 1999. And there is no evidence to support their assertion that such absence was due to the
deliberate failure of Riviera Homes to give them work. There is also the fact, as noted by the
NLRC and the Court of Appeals, that the Agabons did not pray for reinstatement, but only for
separation
pay and money claims.23 This failure indicates their disinterest in maintaining the employer-
employee relationship and their unabated avowed intent to sever it. Their excuse that strained
relations between them and Riviera Homes rendered reinstatement no longer feasible was
hardly given credence by the NLRC and the Court of Appeals.24
The contrary conclusion arrived at by the Labor Arbiter as regards abandonment is of little
bearing to the case. All that the Labor Arbiter said on that point was that Riviera Homes was
not able to refute the Agabons' claim that they were terminated on 23 February 1999. 25 The
Labor Arbiter did not explain why or how such finding was reachhy or how such finding was
reachhe Agabons was more credible than that of Riviera Homes'. Being bereft of reasoning,
the conclusion deserves scant consideration.
Compliance with Notice Requirement
62
At the same time, both the NLRC and the Court of Appeals failed to consider the apparent
fact that the rules governing notice of termination were not complied with by Riviera Homes.
Section 2, Book V, Rule XXIII of the Omnibus Rules Implementing the Labor Code
(Implementing Rules) specifically provides that for termination of employment based on just
causes as defined in Article 282, there must be: (1) written notice served on the employee
specifying the grounds for termination and giving employee reasonable opportunity to explain
his/her side; (2) a hearing or conference wherein the employee, with the assistance of counsel
if so desired, is given opportunity to respond to the charge, present his evidence or rebut
evidence presented against him/her; and (3) written notice of termination served on the
employee indicating that upon due consideration of all the circumstances, grounds have been
established to justify termination.
At the same time, Section 2, Book V, Rule XXIII of the Implementing Rules does not require
strict compliance with the above procedure, but only that the same be "substantially
observed."
Riviera Homes maintains that the letters it sent on 10 March 1999 to the Agabons sufficiently
complied with the notice rule. These identically worded letters noted that the Agabons had
stopped working without permission that they failed to return for work despite having been
repeatedly told to report to the office and resume their employment. 26 The letters ended with
an invitation to the Agabons to report back to the office and return to work. 27
The apparent purpose of these letters was to advise the Agabons that they were welcome to
return back to work, and not to notify them of the grounds of termination. Still, considering
that only substantial compliance with the notice requirement is required, I am prepared to
say that the letters sufficiently conform to the first notice required under the Implementing
Rules. The purpose of the first notice is to duly inform the employee that a particular
transgression is being considered against him or her, and that an opportunity is being offered
for him or her to respond to the charges. The letters served the purpose of informing the
Agabons of the pending matters beclouding their employment, and extending them the
opportunity to clear the air.
Contrary to the Agabons' claim, the letter-notice was correctly sent to the employee's last
known address, in compliance with the Implementing Rules. There is no dispute that these
letters were not actually received by the Agabons, as they had apparently moved out of the
address indicated therein. Still, the letters were sent to what Riviera Homes knew to be the
Agabons' last known address, as indicated in their personnel file. The Agabons insist that
Riviera Homes had known of the change of address, offering as proof their company IDs which
purportedly print out their correct new address. Yet, as pointed out by the NLRC and the Court
of Appeals, the addresses indicated in the IDs are not the Agabons, but that of the person
who is to be notified in case on emergency involve either or both of the Agabons.
The actual violation of the notice requirement by Riviera Homes lies in its failure to serve on
the Agabons the second notice which should inform them of termination. As the Decision
notes, Riviera Homes' argument that sending the second notice was useless due to the change
of address is inutile, since the Implementing Rules plainly require that the notice of
termination should be served at the employee's last known address.
The importance of sending the notice of termination should not be trivialized. The termination
letter serves as indubitable proof of loss of employment, and its receipt compels the employee
to evaluate his or her next options. Without such notice, the employee may be left uncertain
of his fate; thus, its service is mandated by the Implementing Rules. Non-compliance with
the notice rule, as evident in this case, contravenes the Implementing Rules. But does the
violation serve to invalidate the Agabons' dismissal for just cause?
The So-Called Constitutional Law Dimension
Justices Puno and Panganiban opine that the Agabons should be reinstated as a consequence
of the violation of the notice requirement. I respectfully disagree, for the reasons expounded
below.
Constitutional Considerations
Of Due Process and the Notice-Hearing
Requirement in Labor Termination Cases
Justice Puno proposes that the failure to render due notice and hearing prior to dismissal for
just cause constitutes a violation of the constitutional right to due process. This view, as
acknowledged by Justice Puno himself, runs contrary to the Court's pronouncement in Serrano
v. NLRC28 that the absence of due notice and hearing prior to dismissal, if for just cause,
violates statutory due process.
The ponencia of Justice Vicente V. Mendoza in Serrano provides this cogent overview of the
history of the doctrine:
Indeed, to contend that the notice requirement in the Labor Code is an aspect of due
process is to overlook the fact that Art. 283 had its origin in Art. 302 of the Spanish
Code of Commerce of 1882 which gave either party to the employer-employee
relationship the right to terminate their relationship by giving notice to the other one
month in advance. In lieu of notice, an employee could be laid off by paying him a
mesada equivalent to his salary for one month. This provision was repealed by Art.
2270 of the Civil Code, which took effect on August 30, 1950. But on June 12, 1954,
R.A. No. 1052, otherwise known as the Termination Pay Law, was enacted reviving the
mesada. On June 21, 1957, the law was amended by R.A. No. 1787 providing for the
giving of advance notice for every year of service.29
Under Section 1 of the Termination Pay Law, an employer could dismiss an employee without
just cause by serving written notice on the employee at least one month in advance or one-
half month for every year of service of the employee, whichever was longer.30 Failure to serve
63
such written notice entitled the employee to compensation equivalent to his salaries or wages
corresponding to the required period of notice from the date of termination of his employment.
However, there was no similar written notice requirement under the Termination Pay Law if
the dismissal of the employee was for just cause. The Court, speaking through Justice JBL
Reyes, ruled in Phil. Refining Co. v. Garcia:31
[Republic] Act 1052, as amended by Republic Act 1787, impliedly recognizes the right
of the employer to dismiss his employees (hired without definite period) whether for
just case, as therein defined or enumerated, or without it. If there be just cause,
the employer is not required to serve any notice of discharge nor to disburse
termination pay to the employee. xxx32
Clearly, the Court, prior to the enactment of the Labor Code, was ill-receptive to the notion
that termination for just cause without notice or hearing violated the constitutional right to
due process. Nonetheless, the Court recognized an award of damages as the appropriate
remedy. In Galsim v. PNB,33 the Court held:
Of course, the employer's prerogative to dismiss employees hired without a definite
period may be with or without cause. But if the manner in which such right is exercised
is abusive, the employer stands to answer to the dismissed employee for damages. 34
The Termination Pay Law was among the repealed laws with the enactment of the Labor Code
in 1974. Significantly, the Labor Code, in its inception, did not require notice or hearing before
an employer could terminate an employee for just cause. As Justice Mendoza explained:
Where the termination of employment was for a just cause, no notice was required to
be given to the employee. It was only on September 4, 1981 that notice was required
to be given even where the dismissal or termination of an employee was for cause.
This was made in the rules issued by the then Minister of Labor and Employment to
implement B.P. Blg. 130 which amended the Labor Code. And it was still much later
when the notice requirement was embodied in the law with the amendment of Art.
277(b) by R.A. No. 6715 on March 2, 1989.35
It cannot be denied though that the thinking that absence of notice or hearing prior to
termination constituted a constitutional violation has gained a jurisprudential foothold with
the Court. Justice Puno, in his Dissenting Opinion, cites several cases in support of this theory,
beginning with Batangas Laguna Tayabas Bus Co. v. Court of Appeals36 wherein we held that
"the failure of petitioner to give the private respondent the benefit of a hearing before he was
dismissed constitutes an infringement on his constitutional right to due process of law. 37
Still, this theory has been refuted, pellucidly and effectively to my mind, by Justice Mendoza's
disquisition in Serrano, thus:
xxx There are three reasons why, on the other hand, violation by the employer of the
notice requirement cannot be considered a denial of due process resulting in the nullity
of the employee's dismissal or layoff.
The first is that the Due Process Clause of the Constitution is a limitation on
governmental powers. It does not apply to the exercise of private power, such as the
termination of employment under the Labor Code. This is plain from the text of Art.
III, §1 of the Constitution, viz.: "No person shall be deprived of life, liberty, or property
without due process of law. . . ." The reason is simple: Only the State has authority to
take the life, liberty, or property of the individual. The purpose of the Due Process
Clause is to ensure that the exercise of this power is consistent with what are
considered civilized methods.
The second reason is that notice and hearing are required under the Due Process
Clause before the power of organized society are brought to bear upon the individual.
This is obviously not the case of termination of employment under Art. 283. Here the
employee is not faced with an aspect of the adversary system. The purpose for
requiring a 30-day written notice before an employee is laid off is not to afford him an
opportunity to be heard on any charge against him, for there is none. The purpose
rather is to give him time to prepare for the eventual loss of his job and the DOLE an
opportunity to determine whether economic causes do exist justifying the termination
of his employment.
xxx
The third reason why the notice requirement under Art. 283 can not be considered a
requirement of the Due Process Clause is that the employer cannot really be expected
to be entirely an impartial judge of his own cause. This is also the case in termination
of employment for a just cause under Art. 282 (i.e., serious misconduct or willful
disobedience by the employee of the lawful orders of the employer, gross and habitual
neglect of duties, fraud or willful breach of trust of the employer, commission of crime
against the employer or the latter's immediate family or duly authorized
representatives, or other analogous cases).38
The Court in the landmark case of People v. Marti39 clarified the proper dimensions of the Bill
of Rights.
That the Bill of Rights embodied in the Constitution is not meant to be invoked against
acts of private individuals finds support in the deliberations of the Constitutional
Commission. True, the liberties guaranteed by the fundamental law of the land must
always be subject to protection. But protection against whom? Commissioner Bernas
in his sponsorship speech in the Bill of Rights answers the query which he himself
posed, as follows:
64
 "First, the general reflections. The protection of fundamental liberties in the
essence of constitutional democracy. Protection against whom? Protection
against the state. The Bill of Rights governs the relationship between the
individual and the state. Its concern is not the relation between individuals,
between a private individual and other individuals. What the Bill of Rights does
is to declare some forbidden zones in the private sphere inaccessible to any
power holder." (Sponsorship Speech of Commissioner Bernas; Record of the
Constitutional Commission, Vol. 1, p. 674; July 17,1986; Italics supplied) 40
I do not doubt that requiring notice and hearing prior to termination for just cause is an
admirable sentiment borne out of basic equity and fairness. Still, it is not a constitutional
requirement that can impose itself on the relations of private persons and entities. Simply
put, the Bill of Rights affords protection against possible State oppression against its citizens,
but not against an unjust or repressive conduct by a private party towards another.
Justice Puno characterizes the notion that constitutional due process limits government action
alone as "passé," and adverts to nouvelle vague theories which assert that private conduct
may be restrained by constitutional due process. His dissent alludes to the American
experience making references to the post-Civil War/pre-World War II era when the US
Supreme Court seemed overly solicitous to the rights of big business over those of the
workers.
Theories, no matter how entrancing, remain theoretical unless adopted by legislation, or more
controversially, by judicial opinion. There were a few decisions of the US Supreme Court that,
ostensibly, imposed on private persons the values of the constitutional guarantees. However,
in deciding the cases, the American High Court found it necessary to link the actors to
adequate elements of the "State" since the Fourteenth Amendment plainly begins with the
words "No State shall…"41
More crucially to the American experience, it had become necessary to pass legislation in
order to compel private persons to observe constitutional values. While the equal protection
clause was deemed sufficient by the Warren Court to bar racial segregation in public facilities,
it necessitated enactment of the Civil Rights Acts of 1964 to prohibit segregation as enforced
by private persons within their property. In this jurisdiction, I have trust in the statutory
regime that governs the correction of private wrongs. There are thousands of statutes, some
penal or regulatory in nature, that are the source of actionable claims against private persons.
There is even no stopping the State, through the legislative cauldron, from compelling private
individuals, under pain of legal sanction, into observing the norms ordained in the Bill of
Rights.
Justice Panganiban's Separate Opinion asserts that corporate behemoths and even individuals
may now be sources of abuses and threats to human rights and liberties. 42 The concern is not
unfounded, but appropriate remedies exist within our statutes, and so resort to the
constitutional trump card is not necessary. Even if we were to engage the premise, the proper
juristic exercise should be to examine whether an employer has taken the attributes of the
State so that it could be compelled by the Constitution to observe the proscriptions of the Bill
of Rights. But the strained analogy simply does not square since the attributes of an employer
are starkly incongruous with those of the State. Employers plainly do not possess the
awesome powers and the tremendous resources which the State has at its command.
The differences between the State and employers are not merely literal, but extend to their
very essences. Unlike the State, the raison d'etre of employers in business is to accumulate
profits. Perhaps the State and the employer are similarly capacitated to inflict injury or
discomfort on persons under their control, but the same power is also possessed by a school
principal, hospital administrator, or a religious leader, among many others. Indeed, the scope
and reach of authority of an employer pales in comparison with that of the State. There is no
basis to conclude that an employer, or even the employer class, may be deemed a de facto
state and on that premise, compelled to observe the Bill of Rights. There is simply no nexus
in their functions, distaff as they are, that renders it necessary to accord the same
jurisprudential treatment.
It may be so, as alluded in the dissent of Justice Puno, that a conservative court system overly
solicitous to the concerns of business may consciously gut away at rights or privileges owing
to the labor sector. This certainly happened before in the United States in the early part of
the twentieth century, when the progressive labor legislation such as that enacted during
President Roosevelt's New Deal regime — most of them addressing problems of labor — were
struck down by an arch-conservative Court.43 The preferred rationale then was to enshrine
within the constitutional order business prerogatives, rendering them superior to the express
legislative intent. Curiously, following its judicial philosophy at the time the U. S. Supreme
Court made due process guarantee towards employers prevail over the police power to defeat
the cause of labor.44
Of course, this Court should not be insensate to the means and methods by which the
entrenched powerful class may maneuver the socio-political system to ensure self-
preservation. However, the remedy to rightward judicial bias is not leftward judicial bias. The
more proper judicial attitude is to give due respect to legislative prerogatives, regardless of
the ideological sauce they are dipped in.
While the Bill of Rights maintains a position of primacy in the constitutional hierarchy, 45 it has
scope and limitations that must be respected and asserted by the Court, even though they
may at times serve somewhat bitter ends. The dissenting opinions are palpably distressed at
the effect of the Decision, which will undoubtedly provoke those reflexively sympathetic to
the labor class. But haphazard legal theory cannot be used to justify the obverse result. The
adoption of the dissenting views would give rise to all sorts of absurd constitutional claims.
An excommunicated Catholic might demand his/her reinstatement into the good graces of the
Church and into communion on the ground that excommunication was violative of the
constitutional right to due process. A celebrity contracted to endorse Pepsi Cola might sue in
court to void a stipulation that prevents him/her from singing the praises of Coca Cola once
65
in a while, on the ground that such stipulation violates the constitutional right to free speech.
An employee might sue to prevent the employer from reading outgoing e-mail sent through
the company server using the company e-mail address, on the ground that the constitutional
right to privacy of communication would be breached.
The above concerns do not in anyway serve to trivialize the interests of labor. But we must
avoid overarching declarations in order to justify an end result beneficial to labor. I dread the
doctrinal acceptance of the notion that the Bill of Rights, on its own, affords protection and
sanctuary not just from the acts of State but also from the conduct of private persons. Natural
and juridical persons would hesitate to interact for fear that a misstep could lead to their
being charged in court as a constitutional violator. Private institutions that thrive on their
exclusivity, such as churches or cliquish groups, could be forced to renege on their traditional
tenets, including vows of secrecy and the like, if deemed by the Court as inconsistent with
the Bill of Rights. Indeed, that fundamental right of all private persons to be let alone would
be forever diminished because of a questionable notion that contravenes with centuries of
political thought.
It is not difficult to be enraptured by novel legal ideas. Their characterization is susceptible to
the same marketing traps that hook consumers to new products. With the help of unique
wrapping, a catchy label, and testimonials from professed experts from exotic lands, a
malodorous idea may gain wide acceptance, even among those self-possessed with their own
heightened senses of perception. Yet before we join the mad rush in order to proclaim a
theory as "brilliant," a rigorous test must first be employed to determine whether it
complements or contradicts our own system of laws and juristic thought. Without such
analysis, we run the risk of abnegating the doctrines we have fostered for decades and the
protections they may have implanted into our way of life.
Should the Court adopt the view that the Bill of Rights may be invoked to invalidate actions
by private entities against private individuals, the Court would open the floodgates to, and
the docket would be swamped with, litigations of the scurrilous sort. Just as patriotism is the
last refuge of scoundrels, the broad constitutional claim is the final resort of the desperate
litigant.
Constitutional Protection of Labor
The provisions of the 1987 Constitution affirm the primacy of labor and advocate a multi-
faceted state policy that affords, among others, full protection to labor. Section 18, Article II
thereof provides:
The State affirms labor as a primary social economic force. It shall protect the rights
of workers and promote their welfare.
Further, Section 3, Article XIII states:
The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equal employment opportunities for
all.
It shall guarantee the rights of all workers to self-organization, collective bargaining
and negotiations, and peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security to tenure, humane conditions
of work, and a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling disputes, including
conciliation, and shall enforce their mutual compliance therewith to foster industrial
peace.
The State shall regulate the relations between workers and employers, recognizing the
right of labor to its just share in the fruits of production and the right of enterprises to
reasonable returns on investments, and to expansion and growth.
The constitutional enshrinement of the guarantee of full protection of labor is not novel to the
1987 Constitution. Section 6, Article XIV of the 1935 Constitution reads:
The State shall afford protection to labor, especially to working women, and minors,
and shall regulate the relations between the landowner and tenant, and between labor
and capital in industry and in agriculture. The State may provide for compulsory
arbitration.
Similarly, among the principles and state policies declared in the 1973 Constitution, is that
provided in Section 9, Article II thereof:
The State shall afford full protection to labor, promote full employment and equality in
employment, ensure equal work opportunities regardless of sex, race or creed, and
regulate the relations between workers and employers. The State shall assure the
rights of workers to self-organization, collective bargaining, security of tenure, and
just and humane conditions of work. The State may provide for compulsory arbitration.
On the other hand, prior to the 1973 Constitution, the right to security of tenure could only
be found in legislative enactments and their respective implementing rules and regulations.
It was only in the 1973 Constitution that security of tenure was elevated as a constitutional
right. The development of the concept of security of tenure as a constitutionally recognized
right was discussed by this Court in BPI Credit Corporation v. NLRC,46 to wit:
The enthronement of the worker's right to security or tenure in our fundamental law
was not achieved overnight. For all its liberality towards labor, our 1935 Constitution
66
 did not elevate the right as a constitutional right. For a long time, the worker's security
of tenure had only the protective mantle of statutes and their interpretative rules and
regulations. It was as uncertain protection that sometimes yielded to the political
permutations of the times. It took labor nearly four decades of sweat and tears to
persuade our people thru their leaders, to exalt the worker's right to security of tenure
as a sacrosanct constitutional right. It was Article II, section 2 [9] of our 1973
Constitution that declared as a policy that the State shall assure the right of worker's
to security tenure. The 1987 Constitution is even more solicitous of the welfare of
labor. Section 3 of its Article XIII mandates that the State shall afford full protection
to labor and declares that all workers shall be entitled to security of tenure. Among
the enunciated State policies are the
promotion of social justice and a just and dynamic social order. In contrast, the
prerogative of management to dismiss a worker, as an aspect of property right, has
never been endowed with a constitutional status.
The unequivocal constitutional declaration that all workers shall be entitled to security
of tenure spurred our lawmakers to strengthen the protective walls around this hard
earned right. The right was protected from undue infringement both by our substantive
and procedural laws. Thus, the causes for dismissing employees were more defined
and restricted; on the other hand, the procedure of termination was also more clearly
delineated. These substantive and procedural laws must be strictly complied with
before a worker can be dismissed from his employment.47
It is quite apparent that the constitutional protection of labor was entrenched more than eight
decades ago, yet such did not prevent this Court in the past from affirming dismissals for just
cause without valid notice. Nor was there any pretense made that this constitutional maxim
afforded a laborer a positive right against dismissal for just cause on the ground of lack of
valid prior notice. As demonstrated earlier, it was only after the enactment of the Labor Code
that the doctrine relied upon by the dissenting opinions became en vogue. This point
highlights my position that the violation of the notice requirement has statutory moorings,
not constitutional.
It should be also noted that the 1987 Constitution also recognizes the principle of shared
responsibility between workers and employers, and the right of enterprise to reasonable
returns, expansion, and growth. Whatever perceived imbalance there might have been under
previous incarnations of the provision have been obviated by Section 3, Article XIII.
In the case of Manila Prince Hotel v. GSIS,48 we affirmed the presumption that all
constitutional provisions are self-executing. We reasoned that to declare otherwise would
result in the pernicious situation wherein by mere inaction and disregard by the legislature,
constitutional mandates would be rendered ineffectual. Thus, we held:
As against constitutions of the past, modern constitutions have been generally ed upon
a different principle and have often become in effect extensive codes of laws intended
to operate directly upon the people in a manner similar to that of statutory enactments,
and the function of constitutional conventions has evolved into one more like that of a
legislative body. Hence, unless it is expressly provided that a legislative act is
necessary to enforce a constitutional mandate, the presumption now is that all
provisions of the constitution are self-executing. If the constitutional provisions are
treated as requiring legislation instead of self-executing, the legislature would have
the power to ignore and practically nullify the mandate of the fundamental law. This
can be cataclysmic. That is why the prevailing view is, as it has always been, that —
. . . in case of doubt, the Constitution should be considered self-executing
rather than non-self-executing. . . . Unless the contrary is clearly intended, the
provisions of the Constitution should be considered self-executing, as a
contrary rule would give the legislature discretion to determine when, or
whether, they shall be effective. These provisions would be subordinated to the
will of the lawmaking body, which could make them entirely meaningless by
simply refusing to pass the needed implementing statute.49
In further discussing self-executing provisions, this Court stated that:
In self-executing constitutional provisions, the legislature may still enact legislation to
facilitate the exercise of powers directly granted by the constitution, further the
operation of such a provision, prescribe a practice to be used for its enforcement,
provide a convenient remedy for the protection of the rights secured or the
determination thereof, or place reasonable safeguards around the exercise of the right.
The mere fact that legislation may supplement and add to or prescribe a penalty for
the violation of a self-executing constitutional provision does not render such a
provision ineffective in the absence of such legislation. The omission from a
constitution of any express provision for a remedy for enforcing a right or liability is
not necessarily an indication that it was not intended to be self-executing. The rule is
that a self-executing provision of the constitution does not necessarily exhaust
legislative power on the subject, but any legislation must be in harmony with the
constitution, further the exercise of constitutional right and make it more available.
Subsequent legislation however does not necessarily mean that the subject
constitutional provision is not, by itself, fully enforceable.50
Thus, the constitutional mandates of protection to labor and security of tenure may be deemed
as self-executing in the sense that these are automatically acknowledged and observed
without need for any enabling legislation. However, to declare that the constitutional
provisions are enough to guarantee the full exercise of the rights embodied therein, and the
realization of ideals therein expressed, would be impractical, if not unrealistic. The espousal
of such view presents the dangerous tendency of being overbroad and exaggerated. The
guarantees of "full protection to labor" and "security of tenure", when examined in isolation,
67
are facially unqualified, and the broadest interpretation possible suggests a blanket shield in
favor of labor against any form of removal regardless of circumstance. This interpretation
implies an unimpeachable right to continued employment-a utopian notion, doubtless-but still
hardly within the contemplation of the framers. Subsequent legislation is still needed to define
the parameters of these guaranteed rights to ensure the protection and promotion, not only
the rights of the labor sector, but of the employers' as well. Without specific and pertinent
legislation, judicial bodies will be at a loss, formulating their own conclusion to approximate
at least the aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive
enforceable right to stave off the dismissal of an employee for just cause owing to the failure
to serve proper notice or hearing. As manifested by several framers of the 1987 Constitution,
the provisions on social justice require legislative enactments for their enforceability. This is
reflected in the record of debates on the social justice provisions of the Constitution:
MS. [FELICITAS S.] AQUINO: We appreciate the concern of the Commissioner. But this
Committee [on Social Justice] has actually become the forum already of a lot of
specific grievances and specific demands, such that understandably, we may
have been, at one time or another, dangerously treading into the functions of
legislation. Our only plea to the Commission is to focus our perspective on the matter
of social justice and its rightful place in the Constitution. What we envision here is
a mandate specific enough that would give impetus for statutory
implementation. We would caution ourselves in terms of the judicious
exercise of self-censorship against treading into the functions of legislation.
(emphasis supplied)51
xxx
[FLORENZ D.] REGALADO: I notice that the 1935 Constitution had only one section on
social justice; the same is true with the 1973 Constitution. But they seem to have
stood us in good stead; and I am a little surprised why, despite that attempt at
self-censorship, there are certain provisions here which are properly for
legislation.52
xxx
BISHOP [TEODORO S.] BACANI: [I] think the distinction that was given during the
presentation of the provisions on the Bill of Rights by Commissioner Bernas is very
apropos here. He spoke of self-executing rights which belong properly to the
Bill of Rights, and then he spoke of a new body of rights which are more of
claims and that these have come about largely through the works of social
philosophers and then the teaching of the Popes. They focus on the common
good and hence, it is not as easy to pinpoint precisely these rights nor the
situs of the rights. And yet, they exist in relation to the common good.53
xxx
MS. [MINDA LUZ M.] QUESADA: I think the nitty-gritty of this kind of
collaboration will be left to legislation but the important thing now is the
conservation, utilization or maximization of the very limited resources. xxx
[RICARDO J.] ROMULO: The other problem is that, by and large, government services
are inefficient. So, this is a problem all by itself. On Section 19, where the report says
that people's organizations as a principal means of empowering the people to pursue
and protect through peaceful means…, I do not suppose that the Committee
would like to either preempt or exclude the legislature, because the concept
of a representative and democratic system really is that the legislature is
normally the principal means.
[EDMUNDO G.] GARCIA: That is correct. In fact, people cannot even dream of
influencing the composition or the membership of the legislature, if they do
not get organized. It is, in fact, a recognition of the principle that unless a citizenry
is organized and mobilized to pursue its ends peacefully, then it cannot really
participate effectively.54
There is no pretense on the part of the framers that the provisions on Social Justice,
particularly Section 3 of Article XIII, are self-executory. Still, considering the rule that
provisions should be deemed self-executing if enforceable without further legislative action,
an examination of Section 3 of Article XIII is warranted to determine whether it is complete
in itself as a definitive law, or if it needs future legislation for completion and enforcement. 55
Particularly, we should inquire whether or not the provision voids the dismissal of a laborer
for just cause if no valid notice or hearing is attendant.
Constitutional Commissioner Fr. Joaquin G. Bernas makes a significant comment on Section
3, Article XIII of the 1987 Constitution:
The [cluster] of rights guaranteed in the second paragraph are the right "to security
of tenure, humane conditions of work, and a living wage." Again, although these have
been set apart by a period (.) from the next sentence and are therefore not modified
by the final phrase "as may be provided by law," it is not the intention to place
these beyond the reach of valid laws. xxx (emphasis supplied)56
At present, the Labor Code is the primary mechanism to carry out the Constitution's directives.
This is clear from Article 357 under Chapter 1 thereof which essentially restates the policy on
the protection of labor as worded in the 1973 Constitution, which was in force at the time of
enactment of the Labor Code. It crystallizes the fundamental law's policies on labor, defines
the parameters of the rights granted to labor such as the right to security of tenure, and
prescribes the standards for the enforcement of such rights in concrete terms. While not
68
infallible, the measures provided therein tend to ensure the achievement of the constitutional
aims.
The necessity for laws concretizing the constitutional principles on the protection of labor is
evident in the reliance placed upon such laws by the Court in resolving the issue of the validity
of a worker's dismissal. In cases where that was the issue confronting the Court, it
consistently recognized the constitutional right to security of tenure and employed the
standards laid down by prevailing laws in determining whether such right was violated. 58 The
Court's reference to laws other than the Constitution in resolving the issue of dismissal is an
implicit acknowledgment that the right to security of tenure, while recognized in the
Constitution, cannot be implemented uniformly absent a law prescribing concrete standards
for its enforcement.
As discussed earlier, the validity of an employee's dismissal in previous cases was examined
by the Court in accordance with the standards laid down by Congress in the Termination Pay
Law, and subsequently, the Labor Code and the amendments thereto. At present, the validity
of an employee's dismissal is weighed against the standards laid down in Article 279, as well
as Article 282 in relation to Article 277(b) of the Labor Code, for a dismissal for just cause,
and Article 283 for a dismissal for an authorized cause.
The Effect of Statutory Violation
Of Notice and Hearing
There is no doubt that the dismissal of an employee even for just cause, without prior notice
or hearing, violates the Labor Code. However, does such violation necessarily void the
dismissal?
Before I proceed with my discussion on dismissals for just causes, a brief comment regarding
dismissals for authorized cause under Article 283 of the Labor Code. While the justiciable
question in Serrano pertained to a dismissal for unauthorized cause, the ruling therein was
crafted as definitive to dismissals for just cause. Happily, the Decision today does not adopt
the same unwise tack. It should be recognized that dismissals for just cause and dismissals
for authorized cause are governed by different provisions, entail divergent requisites, and
animated by distinct rationales. The language of Article 283 expressly effects the termination
for authorized cause to the service of written notice on the workers and the Ministry of Labor
at least one (1) month before the intended date of termination. This constitutes an eminent
difference than dismissals for just cause, wherein the causal relation between the notice and
the dismissal is not expressly stipulated. The circumstances distinguishing just and authorized
causes are too markedly different to be subjected to the same rules and reasoning in
interpretation.
Since the present petition is limited to a question arising from a dismissal for just cause, there
is no reason for making any pronouncement regarding authorized causes. Such declaration
would be merely obiter, since they are neither the law of the case nor dispositive of the
present petition. When the question becomes justiciable before this Court, we will be
confronted with an appropriate factual milieu on which we can render a more judicious
disposition of this admittedly important question.
B. Dismissal for Just Cause
There is no express provision in the Labor Code that voids a dismissal for just cause on the
ground that there was no notice or hearing. Under Section 279, the employer is precluded
from dismissing an employee except for a just cause as provided in Section 282, or an
authorized cause under Sections 283 and 284. Based on reading Section 279 alone, the
existence of just cause by itself is sufficient to validate the termination.
Just cause is defined by Article 282, which unlike Article 283, does not condition the
termination on the service of written notices. Still, the dissenting opinions propound that even
if there is just cause, a termination may be invalidated due to the absence of notice or hearing.
This view is anchored mainly on constitutional moorings, the basis of which I had argued
against earlier. For determination now is whether there is statutory basis under the Labor
Code to void a dismissal for just cause due to the absence of notice or hearing.
As pointed out by Justice Mendoza in Serrano, it was only in 1989 that the Labor Code was
amended to enshrine into statute the twin requirements of notice and hearing. 59 Such
requirements are found in Article 277 of the Labor Code, under the heading "Miscellaneous
Provisions." Prior to the amendment, the notice-hearing requirement was found under the
implementing rules issued by the then Minister of Labor in 1981. The present-day
implementing rules likewise mandate that the standards of due process, including the
requirement of written notice and hearing, "be substantially observed." 60
Indubitably, the failure to substantially comply with the standards of due process, including
the notice and hearing requirement, may give rise to an actionable claim against the
employer. Under Article 288, penalties may arise from violations of any provision of the Labor
Code. The Secretary of Labor likewise enjoys broad powers to inquire into existing relations
between employers and employees. Systematic violations by management of the statutory
right to due process would fall under the broad grant of power to the Secretary of Labor to
investigate under Article 273.
However, the remedy of reinstatement despite termination for just cause is simply not
authorized by the Labor Code. Neither the Labor Code nor its implementing rules states that
a termination for just cause is voided because the requirement of notice and hearing was not
observed. This is not simply an inadvertent semantic failure, but a conscious effort to protect
the prerogatives of the employer to dismiss an employee for just cause. Notably, despite the
several pronouncements by this Court in the past equating the notice-hearing requirement in
labor cases to a constitutional maxim, neither the legislature nor the executive has adopted
69
the same tack, even gutting the protection to provide that substantial compliance with due
process suffices.
The Labor Code significantly eroded management prerogatives in the hiring and firing of
employees. Whereas employees could be dismissed even without just cause under the
Termination Pay Law61, the Labor Code affords workers broad security of tenure. Still, the law
recognizes the right of the employer to terminate for just cause. The just causes enumerated
under the Labor Code ¾ serious misconduct or willful disobedience, gross and habitual
neglect, fraud or willful breach of trust, commission of a crime by the employee against the
employer, and other analogous causes ¾ are characterized by the harmful behavior of an
employee against the business or the person of the employer.
These just causes for termination are not negated by the absence of notice or hearing. An
employee who tries to kill the employer cannot be magically absolved of trespasses just
because the employer forgot to serve due notice. Or a less extreme example, the gross and
habitual neglect of an employee will not be improved upon just because the employer failed
to conduct a hearing prior to termination.
In fact, the practical purpose of requiring notice and hearing is to afford the employee the
opportunity to dispute the contention that there was just cause in the dismissal. Yet it must
be understood – if a dismissed employee is deprived of the right to notice and hearing,
and thus denied the opportunity to present countervailing evidence that disputes
the finding of just cause, reinstatement will be valid not because the notice and
hearing requirement was not observed, but because there was no just cause in the
dismissal. The opportunity to dispute the finding of the just cause is readily available before
the Labor Arbiter, and the subsequent levels of appellate review. Again, as held in Serrano:
Even in cases of dismissal under Art. 282, the purpose for the requirement of notice and
hearing is not to comply with the Due Process Clause of the Constitution. The time for notice
and hearing is at the trial stage. Then that is the time we speak of notice and hearing as the
essence of procedural due process. Thus, compliance by the employer with the notice
requirement before he dismisses an employee does not foreclose the right of the latter to
question the legality of his dismissal. As Art. 277(b) provides, "Any decision taken by the
employer shall be without prejudice to the right of the worker to contest the validity or legality
of his dismissal by filing a complaint with the regional branch of the National Labor Relations
Commission.62
The Labor Code presents no textually demonstrable commitment to invalidate a dismissal for
just cause due to the absence of notice or hearing. This is not surprising, as such remedy will
not restore the employer or employee into equity. Absent a showing of integral causation, the
mutual infliction of wrongs does not negate either injury, but instead enforces two
independent rights of relief.
The Damages' Dimensions
Award for Damages Must Have Statutory Basis
The Court has grappled with the problem of what should be the proper remedial relief of an
employee dismissed with just cause, but not afforded either notice or hearing. In a long line
of cases, beginning with Wenphil Corp. v. NLRC63 and up until Serrano in 2000, the Court had
deemed an indemnification award as sufficient to answer for the violation by the employer
against the employee. However, the doctrine was modified in Serrano.
I disagree with Serrano insofar as it held that employees terminated for just cause are to be
paid backwages from the time employment was terminated "until it is determined that the
termination is for just cause because the failure to hear him before he is dismissed renders
the termination of his employment without legal effect."64 Article 279 of the Labor Code clearly
authorizes the payment of backwages only if an employee is unjustly dismissed. A dismissal
for just cause is obviously antithetical to an unjust dismissal. An award for backwages is not
clearly warranted by the law.
The Impropriety of Award for Separation Pay
The formula of one month's pay for every year served does have statutory basis. It is found
though in the Labor Code though, not the Civil Code. Even then, such computation is made
for separation pay under the Labor Code. But separation pay is not an appropriate as a remedy
in this case, or in any case wherein an employee is terminated for just cause. As Justice Vitug
noted in his separate opinion in Serrano, an employee whose employment is terminated for
a just cause is not entitled to the payment of separation benefits. 65 Separation pay is
traditionally a monetary award paid as an alternative to reinstatement which can no longer
be effected in view of the long passage of time or because of the realities of the situation. 66
However, under Section 7, Rule 1, Book VI of the Omnibus Rules Implementing the Labor
Code, "[t]he separation from work of an employee for a just cause does not entitle him to the
termination pay provided in the Code."67 Neither does the Labor Code itself provide instances
wherein separation pay is warranted for dismissals with just cause. Separation pay is
warranted only for dismissals for authorized causes, as enumerated in Article 283 and 284 of
the Labor Code.
The Impropriety of Equity Awards
Admittedly, the Court has in the past authorized the award of separation pay for duly
terminated employees as a measure of social justice, provided that the employee is not guilty
of serious misconduct reflecting on moral character. 68 This doctrine is inapplicable in this case,
as the Agabons are guilty of abandonment, which is the deliberate and unjustified refusal of
an employee to resume his employment. Abandonment is tantamount to serious misconduct,
as it constitutes a willful breach of the employer-employee relationship without cause.
The award of separation pay as a measure of social justice has no statutory basis, but clearly
emanates from the Court's so-called "equity jurisdiction." The Court's equity jurisdiction as a
70
basis for award, no matter what form it may take, is likewise unwarranted in this case. Easy
resort to equity should be avoided, as it should yield to positive rules which pre-empt and
prevail over such persuasions.69 Abstract as the concept is, it does not admit to definite and
objective standards.
I consider the pronouncement regarding the proper monetary awards in such cases as
Wenphil Corp. v. NLRC,70 Reta,71 and to a degree, even Serrano as premised in part on equity.
This decision is premised in part due to the absence of cited statutory basis for these awards.
In these cases, the Court deemed an indemnity award proper without exactly saying where
in statute could such award be derived at. Perhaps, equity or social justice can be invoked as
basis for the award. However, this sort of arbitrariness, indeterminacy and judicial usurpation
of legislative prerogatives is precisely the source of my discontent. Social justice should be
the aspiration of all that we do, yet I think it the more mature attitude to consider that it ebbs
and flows within our statutes, rather than view it as an independent source of funding.
Article 288 of the Labor Code as a Source of Liability
Another putative source of liability for failure to render the notice requirement is Article 288
of the Labor Code, which states:
Article 288 states:
Penalties. — Except as otherwise provided in this Code, or unless the acts complained
of hinges on a question of interpretation or implementation of ambiguous provisions
of an existing collective bargaining agreement, any violation of the provisions of this
Code declared to be unlawful or penal in nature shall be punished with a fine of not
less than One Thousand Pesos (P1,000.00) nor more than Ten Thousand Pesos
(P10,000.00), or imprisonment of not less than three months nor more than three
years, or both such fine and imprisonment at the discretion of the court.
It is apparent from the provision that the penalty arises due to contraventions of the
provisions of the Labor Code. It is also clear that the provision comes into play regardless of
who the violator may be. Either the employer or the employee may be penalized, or perhaps
even officials tasked with implementing the Labor Code.
However, it is apparent that Article 288 is a penal provision; hence, the prescription for
penalties such as fine and imprisonment. The Article is also explicit that the imposition of fine
or imprisonment is at the "discretion of the court." Thus, the proceedings under the provision
is penal in character. The criminal case has to be instituted before the proper courts, and the
Labor Code violation subject thereof duly proven in an adversarial proceeding. Hence, Article
288 cannot apply in this case and serve as basis to impose a penalty on Riviera Homes.
I also maintain that under Article 288 the penalty should be paid to the State, and not to the
person or persons who may have suffered injury as a result of the violation. A penalty is a
sum of money which the law requires to be paid by way of punishment for doing some act
which is prohibited or for not doing some act which is required to be done. 72 A penalty should
be distinguished from damages which is the pecuniary compensation or indemnity to a person
who has suffered loss, detriment, or injury, whether to his person, property, or rights, on
account of the unlawful act or omission or negligence of another. Article 288 clearly serves as
a punitive fine, rather than a compensatory measure, since the provision penalizes an act
that violates the Labor Code even if such act does not cause actual injury to any private
person.
Independent of the employee's interests protected by the Labor Code is the interest of the
State in seeing to it that its regulatory laws are complied with. Article 288 is intended to
satiate the latter interest. Nothing in the language of Article 288 indicates an intention to
compensate or remunerate a private person for injury he may have sustained.
It should be noted though that in Serrano, the Court observed that since the promulgation of
Wenphil Corp. v. NLRC73 in 1989, "fines imposed for violations of the notice requirement have
varied from P1,000.00 to P2,000.00 to P5,000.00 to P10,000.00."74 Interestingly, this range
is the same range of the penalties imposed by Article 288. These "fines" adverted to in Serrano
were paid to the dismissed employee. The use of the term "fines," as well as the terminology
employed a few other cases,75 may have left an erroneous impression that the award
implemented beginning with Wenphil was based on Article 288 of the Labor Code. Yet, an
examination of Wenphil reveals that what the Court actually awarded to the employee was
an "indemnity", dependent on the facts of each case and the gravity of the omission
committed by the employer. There is no mention in Wenphil of Article 288 of the Labor Code,
or indeed, of any statutory basis for the award.
The Proper Basis: Employer's Liability under the Civil Code
As earlier stated, Wenphil allowed the payment of indemnity to the employee dismissed for
just cause is dependent on the facts of each case and the gravity of the omission committed
by the employer. However, I considered Wenphil flawed insofar as it is silent as to the
statutory basis for the indemnity award. This failure, to my mind, renders it unwise for to
reinstate the Wenphil rule, and foster the impression that it is the judicial business to invent
awards for damages without clear statutory basis.
The proper legal basis for holding the employer liable for monetary damages to the
employee dismissed for just cause is the Civil Code. The award of damages should
be measured against the loss or injury suffered by the employee by reason of the
employer's violation or, in case of nominal damages, the right vindicated by the
award. This is the proper paradigm authorized by our law, and designed to obtain
the fairest possible relief.
Under Section 217(4) of the Labor Code, the Labor Arbiter has jurisdiction over claims for
actual, moral, exemplary and other forms of damages arising from the employer-employee
71
relations. It is thus the duty of Labor Arbiters to adjudicate claims for damages, and they
should disabuse themselves of any inhibitions if it does appear that an award for damages is
warranted. As triers of facts in a specialized field, they should attune themselves to the
particular conditions or problems attendant to employer-employee relationships, and thus be
in the best possible position as to the nature and amount of damages that may be warranted
in this case.
The damages referred under Section 217(4) of the Labor Code are those available under the
Civil Code. It is but proper that the Civil Code serve as the basis for the indemnity, it being
the law that regulates the private relations of the members of civil society, determining their
respective rights and obligations with reference to persons, things, and civil acts.76 No matter
how impressed with the public interest the relationship between a private employer and
employee is, it still is ultimately a relationship between private individuals. Notably, even
though the Labor Code could very well have provided set rules for damages arising from the
employer-employee relationship, referral was instead made to the concept of damages as
enumerated and defined under the Civil Code.
Given the long controversy that has dogged this present issue regarding dismissals for just
cause, it is wise to lay down standards that would guide the proper award of damages under
the Civil Code in cases wherein the employer failed to comply with statutory due process in
dismissals for just cause.
First. I believe that it can be maintained as a general rule, that failure to comply with the
statutory requirement of notice automatically gives rise to nominal damages, at the very
least, even if the dismissal was sustained for just cause.
Nominal damages are adjudicated in order that a right of a plaintiff which has been violated
or invaded by another may be vindicated or recognized without having to indemnify the
plaintiff for any loss suffered by him.77 Nominal damages may likewise be awarded in every
obligation arising from law, contracts, quasi-contracts, acts or omissions punished by law,
and quasi-delicts, or where any property right has been invaded.
Clearly, the bare act of failing to observe the notice requirement gives rise to nominal
damages assessable against the employer and due the employee. The Labor Code indubitably
entitles the employee to notice even if dismissal is for just cause, even if there is no apparent
intent to void such dismissals deficiently implemented. It has also been held that one's
employment, profession, trade, or calling is a "property right" and the wrongful interference
therewith gives rise to an actionable wrong.78
In Better Buildings, Inc. v. NLRC,79 the Court ruled that the while the termination therein was
for just and valid cause, the manner of termination was done in complete disregard of the
necessary procedural safeguards.80 The Court found nominal damages as the proper form of
award, as it was purposed to vindicate the right to procedural due process violated by the
employer.81 A similar holding was maintained in Iran v. NLRC82 and Malaya Shipping v.
NLRC.83 The doctrine has express statutory basis, duly recognizes the existence of the right
to notice, and vindicates the violation of such right. It is sound, logical, and should be adopted
as a general rule.
The assessment of nominal damages is left to the discretion of the court, 84 or in labor cases,
of the Labor Arbiter and the successive appellate levels. The authority to nominate standards
governing the award of nominal damages has clearly been delegated to the judicial branch,
and it will serve good purpose for this Court to provide such guidelines. Considering that the
affected right is a property right, there is justification in basing the amount of nominal
damages on the particular characteristics attaching to the claimant's employment. Factors
such as length of service, positions held, and received salary may be considered to obtain the
proper measure of nominal damages. After all, the degree by which a property right should
be vindicated is affected by the estimable value of such right.
At the same time, it should be recognized that nominal damages are not meant to be
compensatory, and should not be computed through a formula based on actual losses.
Consequently, nominal damages usually limited in pecuniary value. 85 This fact should be
impressed upon the prospective claimant, especially one who is contemplating seeking
actual/compensatory damages.
Second. Actual or compensatory damages are not available as a matter of right to an
employee dismissed for just cause but denied statutory due process. They must be based on
clear factual and legal bases,86 and correspond to such pecuniary loss suffered by the
employee as duly proven.87 Evidently, there is less degree of discretion to award actual or
compensatory damages.
I recognize some inherent difficulties in establishing actual damages in cases for terminations
validated for just cause. The dismissed employee retains no right to continued employment
from the moment just cause for termination exists, and such time most likely would have
arrived even before the employer is liable to send the first notice. As a result, an award of
backwages disguised as actual damages would almost never be justified if the employee was
dismissed for just cause. The possible exception would be if it can be proven the ground for
just cause came into being only after the dismissed employee had stopped receiving wages
from the employer.
Yet it is not impossible to establish a case for actual damages if dismissal was for just cause.
Particularly actionable, for example, is if the notices are not served on the employee, thus
hampering his/her opportunities to obtain new employment. For as long as it can be
demonstrated that the failure of the employer to observe procedural due process mandated
by the Labor Code is the proximate cause of pecuniary loss or injury to the dismissed
employee, then actual or compensatory damages may be awarded.
Third. If there is a finding of pecuniary loss arising from the employer violation, but the
amount cannot be proved with certainty, then temperate or moderate damages are available
72
under Article 2224 of the Civil Code. Again, sufficient discretion is afforded to the adjudicator HMD 2,100
as regards the proper award, and the award must be reasonable under the circumstances. 88
Temperate or nominal damages may yet prove to be a plausible remedy, especially when Amru 1,388
common sense dictates that pecuniary loss was suffered, but incapable of precise definition.
Iyad Ali 97
Fourth. Moral and exemplary damages may also be awarded in the appropriate circumstances.
Ali 740
As pointed out by the Decision, moral damages are recoverable where the dismissal of the
employee was attended by bad faith, fraud, or was done in a manner contrary to morals, Maher 675
good customs or public policy, or the employer committed an act oppressive to labor. 89
Exemplary damages may avail if the dismissal was effected in a wanton, oppressive or Sharikat 350
malevolent manner.
Imad 905
Appropriate Award of Damages to the Agabons Rubies 2,678

The records indicate no proof exists to justify the award of actual or compensatory damages, Adel 1,125
as it has not been established that the failure to serve the second notice on the Agabons was
$36,168.39
the proximate cause to any loss or injury. In fact, there is not even any showing that such
violation caused any sort of injury or discomfort to the Agabons. Nor do they assert such
causal relation. Thus, the only appropriate award of damages is nominal damages. Please give us an updated report on your collection efforts and the status of each of the above
Considering the circumstances, I agree that an award of Fifteen Thousand Pesos (P15,000.00) accounts to enable us to take necessary actions. This would be submitted on or before April
each for the Agabons is sufficient. 2, 2001

All premises considered, I VOTE to: (SGD) DIVINA ABAD SANTOS

General Manager19
(1) DENY the PETITION for lack of merit, and AFFIRM the Decision of the Court of
Appeals dated 23 January 2003, with the MODIFICATION that in addition, Riviera Memorandum dated May 12, 2001
Homes be
12 May 2001
ORDERED to pay the petitioners the sum of Fifteen Thousand Pesos (P15,000.00) each,
as nominal damages. MEMORANDUM

(2) HOLD that henceforth, dismissals for just cause may not be invalidated due to the TO : MA. LOURDES DE JESUS SALES PROMOTION OFFICER
failure to observe the due process requirements under the Labor Code, and that the
only indemnity award available to the employee dismissed for just cause are damages
FROM : DIVINA S. ABAD SANTOS GENERAL MANAGER
under the Civil Code as duly proven. Any and all previous rulings and statements of
the Court inconsistent with this holding are now deemed INOPERATIVE.
SUBJECT : PAST DUE ACCOUNTS
DANTE O. TINGA
Associate Justice You are asked to refer to my memorandum dated 26 March 2001. We were informed that the
following accounts have been paid to you but not accounted/turned over to the office:

NAME AMOUNTS
RDRI 361

73
 Wafa $6,585 Contrary to Supersonic’s contention, however, the aforequotedmemoranda did not satisfy the
requirement for the two written notices under the law. The March 26, 2001 memorandum did
Monaliza/Ragab 4,326.39 not specify the grounds for which her dismissal would be sought, and for that reasonwas at
best a mere reminder to De Jesus to submit her report on the status of her accounts. The
Salah 1,950 May 12, 2001 memorandumdid not provide the notice of dismissal under the law because
itonly directed her to explain why she should not be dismissed for cause. The latter
Jerico 1,300
memorandum was apparently only the first written noticeunder the requirement.The
Rafat 4,730 insufficiency of the two memoranda as compliance with the two-written notices requirement
of due process was, indeed, indubitable enough to impelthe CA to hold:
Mahmood/Alhirsh 3,205
The evidence on record is bereft of any indicia that the two written notices were furnished to
Amina 2,000 De Jesus prior to her dismissal. The various memoranda given her were not the same notices
MMML 1,653 required by law, as they were mere internal correspondences intended to remind De Jesus of
her outstanding accountabilities to the company. Assuming for the sake of argument that the
RDRI 361 memoranda furnished to De Jesus may have satisfied the minimum requirements of due
process, still, the same did not satisfy the notice requirement under the Labor Code because
HMD 2,100 the intention to sever the employee’s services must be made clear in the notice. Such was
not apparent from the memoranda. As the Supreme Court held in Serrano, the violation of
Amru 1,388 the notice requirement is not strictly a denial of due process. This is because such notice is
Iyad Ali 97 precisely intended to enable the employee not only to prepare himself for the legal battle to
protect his tenure of employment, but also to find other means of employment and ease the
Ali 740 impact of the loss of his job and, necessarily, his income.

Maher 675 Conformably with the doctrine laid down in Serrano vs. NLRC, the dismissal of De Jesus should
therefore be struck (down) as ineffectual.21
Sharikat 350

Imad 905 On the third issue, Supersonicposits that the CA gravely erred in declaring the dismissal of
De Jesus ineffectual pursuant to the ruling inSerrano v. National Labor Relations
Rubies 2,678 Commission;andinsiststhat the CA should have instead applied the ruling in Agabonv. National
Labor Relations Commission,22 which meanwhile abandoned Serrano.
Adel 1,125

$36,168.39 InSerrano, the Court pronounced as follows:

x xx, with respect to dismissals for cause under Art. 282, if it is shown that the employee was
You are hereby directed to explain in writing within 72 hours from receipt of this
dismissed for any of the just causes mentioned in said Art. 282, then, in accordance with that
memorandum, why you should not be dismissed for cause for failure to account for above
article, he should not be reinstated. However, he must be paid backwages from the time his
amounts.
employment was terminated until it is determined that the termination of employment is for
a just cause because the failure to hear him before he is dismissed renders the termination
By your failure to explain in writing the above accountabilities, within the set deadline, we of his employment without legal effect.
shall assume that you have misappropriated the same for your own use and benefit to the
damage of the office.
WHEREFORE, the petition is GRANTED and the resolution of the National Labor Relations
Commission is MODIFIED by ordering private respondent Isetann Department Store, Inc. to
(SGD.)DIVINA S. ABAD SANTOS pay petitioner separation pay equivalent to one (1) month pay for every year of service, his
General Manager20 unpaid salary, and his proportionate 13th month pay and, in addition, full backwages from
74
the time his employment was terminated on October 11, 1991 up to the time the decision
herein becomes final. For this purpose, this case is REMANDED to the Labor Arbiter for
computation of the separation pay, backwages, and other monetary awards to petitioner.
SO ORDERED.23
The CA did not err. Relying on Serrano,the CA precisely ruled that the violation by Supersonic
of the two-written notice requirement renderedineffectual the dismissal of De Jesus for just
cause under Article 282 of the Labor Code, and entitled her to be paid full backwages from
the time of her dismissal until the finality of its decision.The Court cannot ignore thatthe
applicable case law when the CA promulgated its decision on July 23, 2004, and when it
denied Supersonic’s motion for reconsideration on October 21, 2004 was still Serrano.
Considering that the Court determines in this appeal by petition for review on certiorarionly
whether or not the CA committed an error of law in promulgating its assailed decision of July
23, 2004,the CA cannot be declared to have erred on the basis of Serrano being meanwhile
abandoned through Agabonif all thatthe CA did was to fully apply the law and jurisprudence
applicable at the time of its rendition of the judgment.As a rule, a judicial interpretation
becomes a part of the law as of the date that the law was originally passed, subject only to
the qualification that when a doctrine of the Court is overruled and the Court adoptsa different
view, and more so when there is a reversal ofthe doctrine, the new doctrine should be applied
prospectively and should not apply to parties who relied on the old doctrine and acted in good
faith.24 To hold otherwise would be to deprive the law of its quality of fairness and justice,
for, then, there is no recognition of what had transpired prior to such adjudication. 25
Although Agabon,being promulgatedonly on November 17, 2004, ought to be prospective,
not retroactive, in its operation because its language did not expressly state that it would also
operate retroactively,26 the Court has already deemed it to be the wise judicial course to let
its abandonment of Serranobe retroactive as its means of giving effect to its recognition of
the unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but
not complying with statutory due process.27 Under Agabon, the new doctrine is that the failure
of the employer to observe the requirements of due process in favor of the dismissed
employee (that is, the two-written notices rule) should not invalidate or render ineffectual the
dismissal for just or authorized cause. The Agabon Court plainly saw the likelihood of Serrano
producing unfair butfar-reaching consequences, such as, but not limited to, encouraging
frivolous suits where even the most notorious violators of company policies would be rewarded
by invoking due process; to having the constitutional policy of providing protection to labor
be used as a sword to oppress the employers; and to compelling the employers to continue
employing persons who were admittedly guilty of misfeasance or malfeasance and whose
continued employment would be patently inimical to the interest of employers.28
Even so, the Agabon Court still deplored the employer's violation of the employee's right to
statutory due process by directing the payment of indemnity in the form of nominal damages,
the amount of which would be addressed to the sound discretion of the labor tribunal upon
taking into account the relevant circumstances. Thus, the Agabon Court designed such form
of damages as a deterrent to employers from committing in the future violations of the
statutory due process rights of employees, and, at the same time, as at the very least a
vindication or recognition of the fundamental right granted to the employees under the Labor
Code and its implementing rules.29 Accordingly, consistent with precedent30 the amount of
₱50,000.00 as nominal damages is hereby fixed for the purpose of indemnifying De Jesus for
the violation of her right to due process.1âwphi1
WHEREFORE, the Court DENIES the petition for review on certiorari in G.R. No. 164662
entitled Maria Lourdes C. De Jesus v. Han. Raul T Aquino, Presiding Commissioner, NLRC,
Second Division, Quezon City, and Supersonic Services, Inc.; PARTIALLY GRANTS the
petition for review on certiorari in G.R. No. 165787 entitled Supersonic Services, Inc. v. Maria
Lourdes C. De Jesus and, accordingly, DECLARES the dismissal of Maria Lourdes C. De Jesus
for just or authorized cause as valid and effectual; and ORDERS Supersonic Services, Inc. to
pay to Maria Lourdes C. De Jesus ₱50,000.00 as nominal damages to indemnify her for the
violation of her right to due process.
No pronouncements on costs of suit.
SO ORDERED.
G.R. No. 192571 April 22, 2014
ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D. FEIST,
MARIA OLIVIA T. YABUT-MISA, TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR,
Petitioners,
vs.
PEARLIE ANN F. ALCARAZ, Respondent.
RESOLUTION
PERLAS-BERNABE, J.:
For resolution is respondent Pearlie Ann Alcaraz's (Alcaraz) Motion for Reconsideration dated
August 23, 2013 of the Court's Decision dated July 23, 2013 (Decision).1
At the outset, there appears to be no substantial argument in the said motion sufficient for
the Court to depart from the pronouncements made in the initial ruling. But if only to address
Akaraz's novel assertions, and to so placate any doubt or misconception in the resolution of
this case, the Court proceeds to shed light on the matters indicated below.
A. Manner of review.
75
Alcaraz contends that the Court should not have conducted a re-weighing of evidence since a
petition for review on certiorari under Rule 45 of the Rules of Court (Rules) is limited to the
review of questions of law. She submits that since what was under review was a ruling of the
Court of Appeals (CA) rendered via a petition for certiorari under Rule 65 of the Rules, the
Court should only determine whether or not the CA properly determined that the National
Labor Relations Commission (NLRC) committed a grave abuse of discretion.
The assertion does not justify the reconsideration of the assailed Decision.
A careful perusal of the questioned Decision will reveal that the Court actually resolved the
controversy under the above-stated framework of analysis. Essentially, the Court found the
CA to have committed an error in holding that no grave abuse of discretion can be ascribed
to the NLRC since the latter arbitrarily disregarded the legal implication of the attendant
circumstances in this case which should have simply resulted in the finding that Alcaraz was
apprised of the performance standards for her regularization and hence, was properly a
probationary employee. As the Court observed, an employee’s failure to perform the duties
and responsibilities which have been clearly made known to him constitutes a justifiable basis
for a probationary employee’s non-regularization. As detailed in the Decision, Alcaraz was
well-apprised of her duties and responsibilities as well as the probationary status of her
employment:
(a) On June 27, 2004, [Abbott Laboratories, Philippines (Abbott)] caused the
publication in a major broadsheet newspaper of its need for a Regulatory Affairs
Manager, indicating therein the job description for as well as the duties and
responsibilities attendant to the aforesaid position; this prompted Alcaraz to submit
her application to Abbott on October 4, 2004;
(b) In Abbott’s December 7, 2004 offer sheet, it was stated that Alcaraz was to be
employed on a probationary status;
(c) On February 12, 2005, Alcaraz signed an employment contract which specifically
stated, inter alia, that she was to be placed on probation for a period of six (6) months
beginning February 15, 2005 to August 14, 2005;
(d) On the day Alcaraz accepted Abbott’s employment offer, Bernardo sent her copies
of Abbott’s organizational structure and her job description through e-mail;
(e) Alcaraz was made to undergo a pre-employment orientation where [Allan G.
Almazar] informed her that she had to implement Abbott’s Code of Conduct and office
policies on human resources and finance and that she would be reporting directly to
[Kelly Walsh];
(f) Alcaraz was also required to undergo a training program as part of her orientation;
(g) Alcaraz received copies of Abbott’s Code of Conduct and Performance Modules from
[Maria Olivia T. Yabut-Misa] who explained to her the procedure for evaluating the
performance of probationary employees; she was further notified that Abbott had only
one evaluation system for all of its employees; and
(h) Moreover, Alcaraz had previously worked for another pharmaceutical company and
had admitted to have an "extensive training and background" to acquire the necessary
skills for her job.2
Considering the foregoing incidents which were readily observable from the records, the Court
reached the conclusion that the NLRC committed grave abuse of discretion, viz.:
[I]n holding that Alcaraz was illegally dismissed due to her status as a regular and not a
probationary employee, the Court finds that the NLRC committed a grave abuse of discretion.
To elucidate, records show that the NLRC based its decision on the premise that Alcaraz’s
receipt of her job description and Abbott’s Code of Conduct and Performance Modules was not
equivalent to being actually informed of the performance standards upon which she should
have been evaluated on. It, however, overlooked the legal implication of the other attendant
circumstances as detailed herein which should have warranted a contrary finding that Alcaraz
was indeed a probationary and not a regular employee – more particularly the fact that she
was well-aware of her duties and responsibilities and that her failure to adequately perform
the same would lead to her non-regularization and eventually, her termination.3
Consequently, since the CA found that the NLRC did not commit grave abuse of discretion and
denied the certiorari petition before it, the reversal of its ruling was thus in order.
At this juncture, it bears exposition that while NLRC decisions are, by their nature, final and
executory4 and, hence, not subject to appellate review,5 the Court is not precluded from
considering other questions of law aside from the CA’s finding on the NLRC’s grave abuse of
discretion. While the focal point of analysis revolves on this issue, the Court may deal with
ancillary issues – such as, in this case, the question of how a probationary employee is
deemed to have been informed of the standards of his regularization – if only to determine if
the concepts and principles of labor law were correctly applied or misapplied by the NLRC in
its decision. In other words, the Court’s analysis of the NLRC’s interpretation of the
environmental principles and concepts of labor law is not completely prohibited in – as it is
complementary to – a Rule 45 review of labor cases.
Finally, if only to put to rest Alcaraz’s misgivings on the manner in which this case was
reviewed, it bears pointing out that no "factual appellate review" was conducted by the Court
in the Decision. Rather, the Court proceeded to interpret the relevant rules on probationary
employment as applied to settled factual findings. Besides, even on the assumption that a
scrutiny of facts was undertaken, the Court is not altogether barred from conducting the
76
same. This was explained in the case of Career Philippines Shipmanagement, Inc. v. Serna6
wherein the Court held as follows:
Accordingly, we do not re-examine conflicting evidence, re-evaluate the credibility of
witnesses, or substitute the findings of fact of the NLRC, an administrative body that has
expertise in its specialized field. Nor do we substitute our "own judgment for that of the
tribunal in determining where the weight of evidence lies or what evidence is credible." The
factual findings of the NLRC, when affirmed by the CA, are generally conclusive on this Court.
Nevertheless, there are exceptional cases where we, in the exercise of our discretionary
appellate jurisdiction may be urged to look into factual issues raised in a Rule 45 petition. For
instance, when the petitioner persuasively alleges that there is insufficient or insubstantial
evidence on record to support the factual findings of the tribunal or court a quo, as Section
5, Rule 133 of the Rules of Court states in express terms that in cases filed before
administrative or quasi-judicial bodies, a fact may be deemed established only if supported
by substantial evidence.7 (Emphasis supplied)
B. Standards for regularization;
conceptual underpinnings.
Alcaraz posits that, contrary to the Court’s Decision, one’s job description cannot by and of
itself be treated as a standard for regularization as a standard denotes a measure of quantity
or quality. By way of example, Alcaraz cites the case of a probationary salesperson and asks
how does such employee achieve regular status if he does not know how much he needs to
sell to reach the same.
The argument is untenable.
First off, the Court must correct Alcaraz’s mistaken notion: it is not the probationary
employee’s job description but the adequate performance of his duties and responsibilities
which constitutes the inherent and implied standard for regularization. To echo the
fundamental point of the Decision, if the probationary employee had been fully apprised by
his employer of these duties and responsibilities, then basic knowledge and common sense
dictate that he must adequately perform the same, else he fails to pass the probationary trial
and may therefore be subject to termination.8
The determination of "adequate performance" is not, in all cases, measurable by quantitative
specification, such as that of a sales quota in Alcaraz’s example. It is also hinged on the
qualitative assessment of the employee’s work; by its nature, this largely rests on the
reasonable exercise of the employer’s management prerogative. While in some instances the
standards used in measuring the quality of work may be conveyed – such as workers who
construct tangible products which follow particular metrics, not all standards of quality
measurement may be reducible to hard figures or are readily articulable in specific pre-
engagement descriptions. A good example would be the case of probationary employees
whose tasks involve the application of discretion and intellect, such as – to name a few –
lawyers, artists, and journalists. In these kinds of occupation, the best that the employer can
do at the time of engagement is to inform the probationary employee of his duties and
responsibilities and to orient him on how to properly proceed with the same. The employer
cannot bear out in exacting detail at the beginning of the engagement what he deems as
"quality work" especially since the probationary employee has yet to submit the required
output. In the ultimate analysis, the communication of performance standards should be
perceived within the context of the nature of the probationary employee’s duties and
responsibilities.
The same logic applies to a probationary managerial employee who is tasked to supervise a
particular department, as Alcaraz in this case.1âwphi1 It is hardly possible for the employer,
at the time of the employee’s engagement, to map into technical indicators, or convey in
precise detail the quality standards by which the latter should effectively manage the
department. Factors which gauge the ability of the managerial employee to either deal with
his subordinates (e.g., how to spur their performance, or command respect and obedience
from them), or to organize office policies, are hardly conveyable at the outset of the
engagement since the employee has yet to be immersed into the work itself. Given that a
managerial role essentially connotes an exercise of discretion, the quality of effective
management can only be determined through subsequent assessment. While at the time of
engagement, reason dictates that the employer can only inform the probationary managerial
employee of his duties and responsibilities as such and provide the allowable parameters for
the same. Verily, as stated in the Decision, the adequate performance of such duties and
responsibilities is, by and of itself, an implied standard of regularization.
In this relation, it bears mentioning that the performance standard contemplated by law
should not, in all cases, be contained in a specialized system of feedbacks or evaluation. The
Court takes judicial notice of the fact that not all employers, such as simple businesses or
small-scale enterprises, have a sophisticated form of human resource management, so much
so that the adoption of technical indicators as utilized through "comment cards" or "appraisal"
tools should not be treated as a prerequisite for every case of probationary engagement. In
fact, even if a system of such kind is employed and the procedures for its implementation are
not followed, once an employer determines that the probationary employee fails to meet the
standards required for his regularization, the former is not precluded from dismissing the
latter. The rule is that when a valid cause for termination exists, the procedural infirmity
attending the termination only warrants the payment of nominal damages. This was the
principle laid down in the landmark cases of Agabon v. NLRC9 (Agabon) and Jaka Food
Processing Corporation v. Pacot10 (Jaka). In the assailed Decision, the Court actually
extended the application of the Agabon and Jaka rulings to breaches of company procedure,
notwithstanding the employer’s compliance with the statutory requirements under the Labor
Code.11 Hence, although Abbott did not comply with its own termination procedure, its non-
compliance thereof would not detract from the finding that there subsists a valid cause to
terminate Alcaraz’s employment. Abbott, however, was penalized for its contractual breach
and thereby ordered to pay nominal damages.
77
As a final point, Alcaraz cannot take refuge in Aliling v. Feliciano12 (Aliling) since the same is This is a Petition for Review on Certiorari assailing the Decision1 dated May 19, 2003 and the
not squarely applicable to the case at bar. The employee in Aliling, a sales executive, was Resolution dated March 26, 2004 of the Court of Appeals in CA-G.R. SP No. 62434.2
belatedly informed of his quota requirement. Thus, considering the nature of his position, the
fact that he was not informed of his sales quota at the time of his engagement changed the Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc.
complexion of his employment. Contrarily, the nature of Alcaraz's duties and responsibilities (Glaxo) as medical representative on October 24, 1995, after Tecson had undergone training
as Regulatory Affairs Manager negates the application of the foregoing. Records show that and orientation.
Alcaraz was terminated because she (a) did not manage her time effectively; (b) failed to
gain the trust of her staff and to build an effective rapport with them; (c) failed to train her Thereafter, Tecson signed a contract of employment which stipulates, among others, that he
staff effectively; and (d) was not able to obtain the knowledge and ability to make sound agrees to study and abide by existing company rules; to disclose to management any existing
judgments on case processing and article review which were necessary for the proper or future relationship by consanguinity or affinity with co-employees or employees of
performance of her duties.13 Due to the nature and variety of these managerial functions, competing drug companies and should management find that such relationship poses a
the best that Abbott could have done, at the time of Alcaraz's engagement, was to inform her possible conflict of interest, to resign from the company.
of her duties and responsibilities, the adequate performance of which, to repeat, is an inherent
and implied standard for regularization; this is unlike the circumstance in Aliling where a
The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to
quantitative regularization standard, in the term of a sales quota, was readily articulable to
inform management of any existing or future relationship by consanguinity or affinity with co-
the employee at the outset. Hence, since the reasonableness of Alcaraz's assessment clearly
employees or employees of competing drug companies. If management perceives a conflict
appears from the records, her termination was justified. Bear in mind that the quantum of
of interest or a potential conflict between such relationship and the employee’s employment
proof which the employer must discharge is only substantial evidence which, as defined in
with the company, the management and the employee will explore the possibility of a
case law, means that amount of relevant evidence as a reasonable mind might accept as
"transfer to another department in a non-counterchecking position" or preparation for
adequate to support a conclusion, even if other minds, equally reasonable, might conceivably
employment outside the company after six months.
opine otherwise.14 To the Court's mind, this threshold of evidence Abbott amply overcame in
this case.
Tecson was initially assigned to market Glaxo’s products in the Camarines Sur-Camarines
Norte sales area.
All told, the Court hereby denies the instant motion for reconsideration and thereby upholds
the Decision in the main case.
Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra
Pharmaceuticals3 (Astra), a competitor of Glaxo. Bettsy was Astra’s Branch Coordinator in
WHEREFORE, the motion for reconsideration dated August 23, 2013 of the Court's Decision
Albay. She supervised the district managers and medical representatives of her company and
dated July 23, 2013 in this case is hereby DENIED.
prepared marketing strategies for Astra in that area.

SO ORDERED.
Even before they got married, Tecson received several reminders from his District Manager
regarding the conflict of interest which his relationship with Bettsy might engender. Still, love
G.R. No. 162994 September 17, 2004 prevailed, and Tecson married Bettsy in September 1998.

DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON, petitioners, In January 1999, Tecson’s superiors informed him that his marriage to Bettsy gave rise to a
vs. conflict of interest. Tecson’s superiors reminded him that he and Bettsy should decide which
GLAXO WELLCOME PHILIPPINES, INC., Respondent. one of them would resign from their jobs, although they told him that they wanted to retain
him as much as possible because he was performing his job well.
RESOLUTION
Tecson requested for time to comply with the company policy against entering into a
TINGA, J.: relationship with an employee of a competitor company. He explained that Astra, Bettsy’s
employer, was planning to merge with Zeneca, another drug company; and Bettsy was
Confronting the Court in this petition is a novel question, with constitutional overtones, planning to avail of the redundancy package to be offered by Astra. With Bettsy’s separation
involving the validity of the policy of a pharmaceutical company prohibiting its employees from her company, the potential conflict of interest would be eliminated. At the same time,
from marrying employees of any competitor company. they would be able to avail of the attractive redundancy package from Astra.
78
In August 1999, Tecson again requested for more time resolve the problem. In September
1999, Tecson applied for a transfer in Glaxo’s milk division, thinking that since Astra did not
have a milk division, the potential conflict of interest would be eliminated. His application was
denied in view of Glaxo’s "least-movement-possible" policy.
In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur
sales area. Tecson asked Glaxo to reconsider its decision, but his request was denied.
Tecson sought Glaxo’s reconsideration regarding his transfer and brought the matter to
Glaxo’s Grievance Committee. Glaxo, however, remained firm in its decision and gave Tescon
until February 7, 2000 to comply with the transfer order. Tecson defied the transfer order and
continued acting as medical representative in the Camarines Sur-Camarines Norte sales area.
During the pendency of the grievance proceedings, Tecson was paid his salary, but was not
issued samples of products which were competing with similar products manufactured by
Astra. He was also not included in product conferences regarding such products.
Because the parties failed to resolve the issue at the grievance machinery level, they
submitted the matter for voluntary arbitration. Glaxo offered Tecson a separation pay of one-
half (½) month pay for every year of service, or a total of ₱50,000.00 but he declined the
offer. On November 15, 2000, the National Conciliation and Mediation Board (NCMB) rendered
its Decision declaring as valid Glaxo’s policy on relationships between its employees and
persons employed with competitor companies, and affirming Glaxo’s right to transfer Tecson
to another sales territory.
Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing the NCMB
Decision.
On May 19, 2003, the Court of Appeals promulgated its Decision denying the Petition for
Review on the ground that the NCMB did not err in rendering its Decision. The appellate court
held that Glaxo’s policy prohibiting its employees from having personal relationships with
employees of competitor companies is a valid exercise of its management prerogatives. 4
Tecson filed a Motion for Reconsideration of the appellate court’s Decision, but the motion
was denied by the appellate court in its Resolution dated March 26, 2004.5
Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals erred in
affirming the NCMB’s finding that the Glaxo’s policy prohibiting its employees from marrying
an employee of a competitor company is valid; and (ii) the Court of Appeals also erred in not
finding that Tecson was constructively dismissed when he was transferred to a new sales
territory, and deprived of the opportunity to attend products seminars and training sessions. 6
Petitioners contend that Glaxo’s policy against employees marrying employees of competitor
companies violates the equal protection clause of the Constitution because it creates invalid
distinctions among employees on account only of marriage. They claim that the policy restricts
the employees’ right to marry.7
They also argue that Tecson was constructively dismissed as shown by the following
circumstances: (1) he was transferred from the Camarines Sur-Camarines Norte sales area
to the Butuan-Surigao-Agusan sales area, (2) he suffered a diminution in pay, (3) he was
excluded from attending seminars and training sessions for medical representatives, and (4)
he was prohibited from promoting respondent’s products which were competing with Astra’s
products.8
In its Comment on the petition, Glaxo argues that the company policy prohibiting its
employees from having a relationship with and/or marrying an employee of a competitor
company is a valid exercise of its management prerogatives and does not violate the equal
protection clause; and that Tecson’s reassignment from the Camarines Norte-Camarines Sur
sales area to the Butuan City-Surigao City and Agusan del Sur sales area does not amount to
constructive dismissal.9
Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical
products, it has a genuine interest in ensuring that its employees avoid any activity,
relationship or interest that may conflict with their responsibilities to the company. Thus, it
expects its employees to avoid having personal or family interests in any competitor company
which may influence their actions and decisions and consequently deprive Glaxo of legitimate
profits. The policy is also aimed at preventing a competitor company from gaining access to
its secrets, procedures and policies.10
It likewise asserts that the policy does not prohibit marriage per se but only proscribes existing
or future relationships with employees of competitor companies, and is therefore not violative
of the equal protection clause. It maintains that considering the nature of its business, the
prohibition is based on valid grounds.11
According to Glaxo, Tecson’s marriage to Bettsy, an employee of Astra, posed a real and
potential conflict of interest. Astra’s products were in direct competition with 67% of the
products sold by Glaxo. Hence, Glaxo’s enforcement of the foregoing policy in Tecson’s case
was a valid exercise of its management prerogatives.12 In any case, Tecson was given several
months to remedy the situation, and was even encouraged not to resign but to ask his wife
to resign form Astra instead.13
Glaxo also points out that Tecson can no longer question the assailed company policy because
when he signed his contract of employment, he was aware that such policy was stipulated
therein. In said contract, he also agreed to resign from respondent if the management finds
that his relationship with an employee of a competitor company would be detrimental to the
interests of Glaxo.14
79
Glaxo likewise insists that Tecson’s reassignment to another sales area and his exclusion from
seminars regarding respondent’s new products did not amount to constructive dismissal.
It claims that in view of Tecson’s refusal to resign, he was relocated from the Camarines Sur-
Camarines Norte sales area to the Butuan City-Surigao City and Agusan del Sur sales area.
Glaxo asserts that in effecting the reassignment, it also considered the welfare of Tecson’s
family. Since Tecson’s hometown was in Agusan del Sur and his wife traces her roots to
Butuan City, Glaxo assumed that his transfer from the Bicol region to the Butuan City sales
area would be favorable to him and his family as he would be relocating to a familiar territory
and minimizing his travel expenses.15
In addition, Glaxo avers that Tecson’s exclusion from the seminar concerning the new anti-
asthma drug was due to the fact that said product was in direct competition with a drug which
was soon to be sold by Astra, and hence, would pose a potential conflict of interest for him.
Lastly, the delay in Tecson’s receipt of his sales paraphernalia was due to the mix-up created
by his refusal to transfer to the Butuan City sales area (his paraphernalia was delivered to his
new sales area instead of Naga City because the supplier thought he already transferred to
Butuan).16
The Court is tasked to resolve the following issues: (1) Whether the Court of Appeals erred in
ruling that Glaxo’s policy against its employees marrying employees from competitor
companies is valid, and in not holding that said policy violates the equal protection clause of
the Constitution; (2) Whether Tecson was constructively dismissed.
The Court finds no merit in the petition.
The stipulation in Tecson’s contract of employment with Glaxo being questioned by petitioners
provides:
… counter checking position, or by career preparation toward outside employment after
10. You agree to disclose to management any existing or future relationship you may
have, either by consanguinity or affinity with co-employees or employees of competing
drug companies. Should it pose a possible conflict of interest in management
discretion, you agree to resign voluntarily from the Company as a matter of Company
policy.
…17
The same contract also stipulates that Tescon agrees to abide by the existing company rules
of Glaxo, and to study and become acquainted with such policies. 18 In this regard, the
Employee Handbook of Glaxo expressly informs its employees of its rules regarding conflict
of interest:
1. Conflict of Interest
Employees should avoid any activity, investment relationship, or interest that may run
counter to the responsibilities which they owe Glaxo Wellcome.
Specifically, this means that employees are expected:
a. To avoid having personal or family interest, financial or otherwise, in any
competitor supplier or other businesses which may consciously or
unconsciously influence their actions or decisions and thus deprive Glaxo
Wellcome of legitimate profit.
b. To refrain from using their position in Glaxo Wellcome or knowledge of
Company plans to advance their outside personal interests, that of their
relatives, friends and other businesses.
c. To avoid outside employment or other interests for income which would
impair their effective job performance.
d. To consult with Management on such activities or relationships that may lead
to conflict of interest.
1.1. Employee Relationships
Employees with existing or future relationships either by consanguinity or affinity with
co-employees of competing drug companies are expected to disclose such relationship
to the Management. If management perceives a conflict or potential conflict of interest,
every effort shall be made, together by management and the employee, to arrive at a
solution within six (6) months, either by transfer to another department in a non-
Glaxo Wellcome. Employees must be prepared for possible resignation within six (6)
months, if no other solution is feasible.19
No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxo’s policy
prohibiting an employee from having a relationship with an employee of a competitor
company is a valid exercise of management prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies
and other confidential programs and information from competitors, especially so that it and
Astra are rival companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor
companies upon Glaxo’s employees is reasonable under the circumstances because
80
relationships of that nature might compromise the interests of the company. In laying down
the assailed company policy, Glaxo only aims to protect its interests against the possibility
that a competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No less
than the Constitution recognizes the right of enterprises to adopt and enforce such a policy
to protect its right to reasonable returns on investments and to expansion and growth. 20
Indeed, while our laws endeavor to give life to the constitutional policy on social justice and
the protection of labor, it does not mean that every labor dispute will be decided in favor of
the workers. The law also recognizes that management has rights which are also entitled to
respect and enforcement in the interest of fair play.21
As held in a Georgia, U.S.A case,22 it is a legitimate business practice to guard business
confidentiality and protect a competitive position by even-handedly disqualifying from jobs
male and female applicants or employees who are married to a competitor. Consequently,
the court ruled than an employer that discharged an employee who was married to an
employee of an active competitor did not violate Title VII of the Civil Rights Act of 1964. 23 The
Court pointed out that the policy was applied to men and women equally, and noted that the
employer’s business was highly competitive and that gaining inside information would
constitute a competitive advantage.
The challenged company policy does not violate the equal protection clause of the Constitution
as petitioners erroneously suggest. It is a settled principle that the commands of the equal
protection clause are addressed only to the state or those acting under color of its authority. 24
Corollarily, it has been held in a long array of U.S. Supreme Court decisions that the equal
protection clause erects no shield against merely private conduct, however, discriminatory or
wrongful.25 The only exception occurs when the state29 in any of its manifestations or actions
has been found to have become entwined or involved in the wrongful private conduct.27
Obviously, however, the exception is not present in this case. Significantly, the company
actually enforced the policy after repeated requests to the employee to comply with the policy.
Indeed, the application of the policy was made in an impartial and even-handed manner, with
due regard for the lot of the employee.
In any event, from the wordings of the contractual provision and the policy in its employee
handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships
between its employees and those of competitor companies. Its employees are free to cultivate
relationships with and marry persons of their own choosing. What the company merely seeks
to avoid is a conflict of interest between the employee and the company that may arise out
of such relationships. As succinctly explained by the appellate court, thus:
The policy being questioned is not a policy against marriage. An employee of the
company remains free to marry anyone of his or her choosing. The policy is not aimed
at restricting a personal prerogative that belongs only to the individual. However, an
employee’s personal decision does not detract the employer from exercising
management prerogatives to ensure maximum profit and business success. . .28
The Court of Appeals also correctly noted that the assailed company policy which forms part
of respondent’s Employee Code of Conduct and of its contracts with its employees, such as
that signed by Tescon, was made known to him prior to his employment. Tecson, therefore,
was aware of that restriction when he signed his employment contract and when he entered
into a relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a contract
of employment with Glaxo, the stipulations therein have the force of law between them and,
thus, should be complied with in good faith."29 He is therefore estopped from questioning said
policy.
The Court finds no merit in petitioners’ contention that Tescon was constructively dismissed
when he was transferred from the Camarines Norte-Camarines Sur sales area to the Butuan
City-Surigao City-Agusan del Sur sales area, and when he was excluded from attending the
company’s seminar on new products which were directly competing with similar products
manufactured by Astra. Constructive dismissal is defined as a quitting, an involuntary
resignation resorted to when continued employment becomes impossible, unreasonable, or
unlikely; when there is a demotion in rank or diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to the employee.30 None of these
conditions are present in the instant case. The record does not show that Tescon was demoted
or unduly discriminated upon by reason of such transfer. As found by the appellate court,
Glaxo properly exercised its management prerogative in reassigning Tecson to the Butuan
City sales area:
. . . In this case, petitioner’s transfer to another place of assignment was merely in
keeping with the policy of the company in avoidance of conflict of interest, and thus
valid…Note that [Tecson’s] wife holds a sensitive supervisory position as Branch
Coordinator in her employer-company which requires her to work in close coordination
with District Managers and Medical Representatives. Her duties include monitoring
sales of Astra products, conducting sales drives, establishing and furthering
relationship with customers, collection, monitoring and managing Astra’s
inventory…she therefore takes an active participation in the market war characterized
as it is by stiff competition among pharmaceutical companies. Moreover, and this is
significant, petitioner’s sales territory covers Camarines Sur and Camarines Norte
while his wife is supervising a branch of her employer in Albay. The proximity of their
areas of responsibility, all in the same Bicol Region, renders the conflict of interest not
only possible, but actual, as learning by one spouse of the other’s market strategies
in the region would be inevitable. [Management’s] appreciation of a conflict of interest
is therefore not merely illusory and wanting in factual basis…31
In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission,32 which involved
a complaint filed by a medical representative against his employer drug company for illegal
dismissal for allegedly terminating his employment when he refused to accept his
81
reassignment to a new area, the Court upheld the right of the drug company to transfer or
reassign its employee in accordance with its operational demands and requirements. The
ruling of the Court therein, quoted hereunder, also finds application in the instant case:
By the very nature of his employment, a drug salesman or medical representative is
expected to travel. He should anticipate reassignment according to the demands of
their business. It would be a poor drug corporation which cannot even assign its
representatives or detail men to new markets calling for opening or expansion or to
areas where the need for pushing its products is great. More so if such reassignments
are part of the employment contract.33
As noted earlier, the challenged policy has been implemented by Glaxo impartially and
disinterestedly for a long period of time. In the case at bar, the record shows that Glaxo gave
Tecson several chances to eliminate the conflict of interest brought about by his relationship
with Bettsy. When their relationship was still in its initial stage, Tecson’s supervisors at Glaxo
constantly reminded him about its effects on his employment with the company and on the
company’s interests. After Tecson married Bettsy, Glaxo gave him time to resolve the conflict
by either resigning from the company or asking his wife to resign from Astra. Glaxo even
expressed its desire to retain Tecson in its employ because of his satisfactory performance
and suggested that he ask Bettsy to resign from her company instead. Glaxo likewise acceded
to his repeated requests for more time to resolve the conflict of interest. When the problem
could not be resolved after several years of waiting, Glaxo was constrained to reassign Tecson
to a sales area different from that handled by his wife for Astra. Notably, the Court did not
terminate Tecson from employment but only reassigned him to another area where his home
province, Agusan del Sur, was included. In effecting Tecson’s transfer, Glaxo even considered
the welfare of Tecson’s family. Clearly, the foregoing dispels any suspicion of unfairness and
bad faith on the part of Glaxo.34
WHEREFORE, the Petition is DENIED for lack of merit. Costs against petitioners.
SO ORDERED.
G.R. No. 162994 September 17, 2004
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON, petitioners,
vs.
GLAXO WELLCOME PHILIPPINES, INC., Respondent.
RESOLUTION
TINGA, J.:
Confronting the Court in this petition is a novel question, with constitutional overtones,
involving the validity of the policy of a pharmaceutical company prohibiting its employees
from marrying employees of any competitor company.
This is a Petition for Review on Certiorari assailing the Decision1 dated May 19, 2003 and the
Resolution dated March 26, 2004 of the Court of Appeals in CA-G.R. SP No. 62434.2
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc.
(Glaxo) as medical representative on October 24, 1995, after Tecson had undergone training
and orientation.
Thereafter, Tecson signed a contract of employment which stipulates, among others, that he
agrees to study and abide by existing company rules; to disclose to management any existing
or future relationship by consanguinity or affinity with co-employees or employees of
competing drug companies and should management find that such relationship poses a
possible conflict of interest, to resign from the company.
The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to
inform management of any existing or future relationship by consanguinity or affinity with co-
employees or employees of competing drug companies. If management perceives a conflict
of interest or a potential conflict between such relationship and the employee’s employment
with the company, the management and the employee will explore the possibility of a
"transfer to another department in a non-counterchecking position" or preparation for
employment outside the company after six months.
Tecson was initially assigned to market Glaxo’s products in the Camarines Sur-Camarines
Norte sales area.
Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra
Pharmaceuticals3 (Astra), a competitor of Glaxo. Bettsy was Astra’s Branch Coordinator in
Albay. She supervised the district managers and medical representatives of her company and
prepared marketing strategies for Astra in that area.
Even before they got married, Tecson received several reminders from his District Manager
regarding the conflict of interest which his relationship with Bettsy might engender. Still, love
prevailed, and Tecson married Bettsy in September 1998.
In January 1999, Tecson’s superiors informed him that his marriage to Bettsy gave rise to a
conflict of interest. Tecson’s superiors reminded him that he and Bettsy should decide which
one of them would resign from their jobs, although they told him that they wanted to retain
him as much as possible because he was performing his job well.
Tecson requested for time to comply with the company policy against entering into a
relationship with an employee of a competitor company. He explained that Astra, Bettsy’s
82
employer, was planning to merge with Zeneca, another drug company; and Bettsy was
planning to avail of the redundancy package to be offered by Astra. With Bettsy’s separation
from her company, the potential conflict of interest would be eliminated. At the same time,
they would be able to avail of the attractive redundancy package from Astra.
In August 1999, Tecson again requested for more time resolve the problem. In September
1999, Tecson applied for a transfer in Glaxo’s milk division, thinking that since Astra did not
have a milk division, the potential conflict of interest would be eliminated. His application was
denied in view of Glaxo’s "least-movement-possible" policy.
In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur
sales area. Tecson asked Glaxo to reconsider its decision, but his request was denied.
Tecson sought Glaxo’s reconsideration regarding his transfer and brought the matter to
Glaxo’s Grievance Committee. Glaxo, however, remained firm in its decision and gave Tescon
until February 7, 2000 to comply with the transfer order. Tecson defied the transfer order and
continued acting as medical representative in the Camarines Sur-Camarines Norte sales area.
During the pendency of the grievance proceedings, Tecson was paid his salary, but was not
issued samples of products which were competing with similar products manufactured by
Astra. He was also not included in product conferences regarding such products.
Because the parties failed to resolve the issue at the grievance machinery level, they
submitted the matter for voluntary arbitration. Glaxo offered Tecson a separation pay of one-
half (½) month pay for every year of service, or a total of ₱50,000.00 but he declined the
offer. On November 15, 2000, the National Conciliation and Mediation Board (NCMB) rendered
its Decision declaring as valid Glaxo’s policy on relationships between its employees and
persons employed with competitor companies, and affirming Glaxo’s right to transfer Tecson
to another sales territory.
Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing the NCMB
Decision.
On May 19, 2003, the Court of Appeals promulgated its Decision denying the Petition for
Review on the ground that the NCMB did not err in rendering its Decision. The appellate court
held that Glaxo’s policy prohibiting its employees from having personal relationships with
employees of competitor companies is a valid exercise of its management prerogatives. 4
Tecson filed a Motion for Reconsideration of the appellate court’s Decision, but the motion
was denied by the appellate court in its Resolution dated March 26, 2004.5
Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals erred in
affirming the NCMB’s finding that the Glaxo’s policy prohibiting its employees from marrying
an employee of a competitor company is valid; and (ii) the Court of Appeals also erred in not
finding that Tecson was constructively dismissed when he was transferred to a new sales
territory, and deprived of the opportunity to attend products seminars and training sessions.6
Petitioners contend that Glaxo’s policy against employees marrying employees of competitor
companies violates the equal protection clause of the Constitution because it creates invalid
distinctions among employees on account only of marriage. They claim that the policy restricts
the employees’ right to marry.7
They also argue that Tecson was constructively dismissed as shown by the following
circumstances: (1) he was transferred from the Camarines Sur-Camarines Norte sales area
to the Butuan-Surigao-Agusan sales area, (2) he suffered a diminution in pay, (3) he was
excluded from attending seminars and training sessions for medical representatives, and (4)
he was prohibited from promoting respondent’s products which were competing with Astra’s
products.8
In its Comment on the petition, Glaxo argues that the company policy prohibiting its
employees from having a relationship with and/or marrying an employee of a competitor
company is a valid exercise of its management prerogatives and does not violate the equal
protection clause; and that Tecson’s reassignment from the Camarines Norte-Camarines Sur
sales area to the Butuan City-Surigao City and Agusan del Sur sales area does not amount to
constructive dismissal.9
Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical
products, it has a genuine interest in ensuring that its employees avoid any activity,
relationship or interest that may conflict with their responsibilities to the company. Thus, it
expects its employees to avoid having personal or family interests in any competitor company
which may influence their actions and decisions and consequently deprive Glaxo of legitimate
profits. The policy is also aimed at preventing a competitor company from gaining access to
its secrets, procedures and policies.10
It likewise asserts that the policy does not prohibit marriage per se but only proscribes existing
or future relationships with employees of competitor companies, and is therefore not violative
of the equal protection clause. It maintains that considering the nature of its business, the
prohibition is based on valid grounds.11
According to Glaxo, Tecson’s marriage to Bettsy, an employee of Astra, posed a real and
potential conflict of interest. Astra’s products were in direct competition with 67% of the
products sold by Glaxo. Hence, Glaxo’s enforcement of the foregoing policy in Tecson’s case
was a valid exercise of its management prerogatives.12 In any case, Tecson was given several
months to remedy the situation, and was even encouraged not to resign but to ask his wife
to resign form Astra instead.13
Glaxo also points out that Tecson can no longer question the assailed company policy because
when he signed his contract of employment, he was aware that such policy was stipulated
83
therein. In said contract, he also agreed to resign from respondent if the management finds
that his relationship with an employee of a competitor company would be detrimental to the
interests of Glaxo.14
Glaxo likewise insists that Tecson’s reassignment to another sales area and his exclusion from
seminars regarding respondent’s new products did not amount to constructive dismissal.
It claims that in view of Tecson’s refusal to resign, he was relocated from the Camarines Sur-
Camarines Norte sales area to the Butuan City-Surigao City and Agusan del Sur sales area.
Glaxo asserts that in effecting the reassignment, it also considered the welfare of Tecson’s
family. Since Tecson’s hometown was in Agusan del Sur and his wife traces her roots to
Butuan City, Glaxo assumed that his transfer from the Bicol region to the Butuan City sales
area would be favorable to him and his family as he would be relocating to a familiar territory
and minimizing his travel expenses.15
In addition, Glaxo avers that Tecson’s exclusion from the seminar concerning the new anti-
asthma drug was due to the fact that said product was in direct competition with a drug which
was soon to be sold by Astra, and hence, would pose a potential conflict of interest for him.
Lastly, the delay in Tecson’s receipt of his sales paraphernalia was due to the mix-up created
by his refusal to transfer to the Butuan City sales area (his paraphernalia was delivered to his
new sales area instead of Naga City because the supplier thought he already transferred to
Butuan).16
The Court is tasked to resolve the following issues: (1) Whether the Court of Appeals erred in
ruling that Glaxo’s policy against its employees marrying employees from competitor
companies is valid, and in not holding that said policy violates the equal protection clause of
the Constitution; (2) Whether Tecson was constructively dismissed.
The Court finds no merit in the petition.
The stipulation in Tecson’s contract of employment with Glaxo being questioned by petitioners
provides:
… solution within six (6) months, either by transfer to another department in a non-
10. You agree to disclose to management any existing or future relationship you may
have, either by consanguinity or affinity with co-employees or employees of competing
drug companies. Should it pose a possible conflict of interest in management
discretion, you agree to resign voluntarily from the Company as a matter of Company
policy.
…17
The same contract also stipulates that Tescon agrees to abide by the existing company rules
of Glaxo, and to study and become acquainted with such policies. 18 In this regard, the
Employee Handbook of Glaxo expressly informs its employees of its rules regarding conflict
of interest:
1. Conflict of Interest
Employees should avoid any activity, investment relationship, or interest that may run
counter to the responsibilities which they owe Glaxo Wellcome.
Specifically, this means that employees are expected:
a. To avoid having personal or family interest, financial or otherwise, in any
competitor supplier or other businesses which may consciously or
unconsciously influence their actions or decisions and thus deprive Glaxo
Wellcome of legitimate profit.
b. To refrain from using their position in Glaxo Wellcome or knowledge of
Company plans to advance their outside personal interests, that of their
relatives, friends and other businesses.
c. To avoid outside employment or other interests for income which would
impair their effective job performance.
d. To consult with Management on such activities or relationships that may lead
to conflict of interest.
1.1. Employee Relationships
Employees with existing or future relationships either by consanguinity or affinity with
co-employees of competing drug companies are expected to disclose such relationship
to the Management. If management perceives a conflict or potential conflict of interest,
every effort shall be made, together by management and the employee, to arrive at a
counter checking position, or by career preparation toward outside employment after
Glaxo Wellcome. Employees must be prepared for possible resignation within six (6)
months, if no other solution is feasible.19
No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxo’s policy
prohibiting an employee from having a relationship with an employee of a competitor
company is a valid exercise of management prerogative.
84
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies
and other confidential programs and information from competitors, especially so that it and
Astra are rival companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor
companies upon Glaxo’s employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. In laying down
the assailed company policy, Glaxo only aims to protect its interests against the possibility
that a competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No less
than the Constitution recognizes the right of enterprises to adopt and enforce such a policy
to protect its right to reasonable returns on investments and to expansion and growth. 20
Indeed, while our laws endeavor to give life to the constitutional policy on social justice and
the protection of labor, it does not mean that every labor dispute will be decided in favor of
the workers. The law also recognizes that management has rights which are also entitled to
respect and enforcement in the interest of fair play.21
As held in a Georgia, U.S.A case,22 it is a legitimate business practice to guard business
confidentiality and protect a competitive position by even-handedly disqualifying from jobs
male and female applicants or employees who are married to a competitor. Consequently,
the court ruled than an employer that discharged an employee who was married to an
employee of an active competitor did not violate Title VII of the Civil Rights Act of 1964. 23 The
Court pointed out that the policy was applied to men and women equally, and noted that the
employer’s business was highly competitive and that gaining inside information would
constitute a competitive advantage.
The challenged company policy does not violate the equal protection clause of the Constitution
as petitioners erroneously suggest. It is a settled principle that the commands of the equal
protection clause are addressed only to the state or those acting under color of its authority. 24
Corollarily, it has been held in a long array of U.S. Supreme Court decisions that the equal
protection clause erects no shield against merely private conduct, however, discriminatory or
wrongful.25 The only exception occurs when the state29 in any of its manifestations or actions
has been found to have become entwined or involved in the wrongful private conduct. 27
Obviously, however, the exception is not present in this case. Significantly, the company
actually enforced the policy after repeated requests to the employee to comply with the policy.
Indeed, the application of the policy was made in an impartial and even-handed manner, with
due regard for the lot of the employee.
In any event, from the wordings of the contractual provision and the policy in its employee
handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships
between its employees and those of competitor companies. Its employees are free to cultivate
relationships with and marry persons of their own choosing. What the company merely seeks
to avoid is a conflict of interest between the employee and the company that may arise out
of such relationships. As succinctly explained by the appellate court, thus:
The policy being questioned is not a policy against marriage. An employee of the
company remains free to marry anyone of his or her choosing. The policy is not aimed
at restricting a personal prerogative that belongs only to the individual. However, an
employee’s personal decision does not detract the employer from exercising
management prerogatives to ensure maximum profit and business success. . .28
The Court of Appeals also correctly noted that the assailed company policy which forms part
of respondent’s Employee Code of Conduct and of its contracts with its employees, such as
that signed by Tescon, was made known to him prior to his employment. Tecson, therefore,
was aware of that restriction when he signed his employment contract and when he entered
into a relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a contract
of employment with Glaxo, the stipulations therein have the force of law between them and,
thus, should be complied with in good faith."29 He is therefore estopped from questioning said
policy.
The Court finds no merit in petitioners’ contention that Tescon was constructively dismissed
when he was transferred from the Camarines Norte-Camarines Sur sales area to the Butuan
City-Surigao City-Agusan del Sur sales area, and when he was excluded from attending the
company’s seminar on new products which were directly competing with similar products
manufactured by Astra. Constructive dismissal is defined as a quitting, an involuntary
resignation resorted to when continued employment becomes impossible, unreasonable, or
unlikely; when there is a demotion in rank or diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to the employee. 30 None of these
conditions are present in the instant case. The record does not show that Tescon was demoted
or unduly discriminated upon by reason of such transfer. As found by the appellate court,
Glaxo properly exercised its management prerogative in reassigning Tecson to the Butuan
City sales area:
. . . In this case, petitioner’s transfer to another place of assignment was merely in
keeping with the policy of the company in avoidance of conflict of interest, and thus
valid…Note that [Tecson’s] wife holds a sensitive supervisory position as Branch
Coordinator in her employer-company which requires her to work in close coordination
with District Managers and Medical Representatives. Her duties include monitoring
sales of Astra products, conducting sales drives, establishing and furthering
relationship with customers, collection, monitoring and managing Astra’s
inventory…she therefore takes an active participation in the market war characterized
as it is by stiff competition among pharmaceutical companies. Moreover, and this is
significant, petitioner’s sales territory covers Camarines Sur and Camarines Norte
while his wife is supervising a branch of her employer in Albay. The proximity of their
areas of responsibility, all in the same Bicol Region, renders the conflict of interest not
only possible, but actual, as learning by one spouse of the other’s market strategies
85
 in the region would be inevitable. [Management’s] appreciation of a conflict of interest
is therefore not merely illusory and wanting in factual basis…31
In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission,32 which involved
a complaint filed by a medical representative against his employer drug company for illegal
dismissal for allegedly terminating his employment when he refused to accept his
reassignment to a new area, the Court upheld the right of the drug company to transfer or
reassign its employee in accordance with its operational demands and requirements. The
ruling of the Court therein, quoted hereunder, also finds application in the instant case:
By the very nature of his employment, a drug salesman or medical representative is
expected to travel. He should anticipate reassignment according to the demands of
their business. It would be a poor drug corporation which cannot even assign its
representatives or detail men to new markets calling for opening or expansion or to
areas where the need for pushing its products is great. More so if such reassignments
are part of the employment contract.33
As noted earlier, the challenged policy has been implemented by Glaxo impartially and
disinterestedly for a long period of time. In the case at bar, the record shows that Glaxo gave
Tecson several chances to eliminate the conflict of interest brought about by his relationship
with Bettsy. When their relationship was still in its initial stage, Tecson’s supervisors at Glaxo
constantly reminded him about its effects on his employment with the company and on the
company’s interests. After Tecson married Bettsy, Glaxo gave him time to resolve the conflict
by either resigning from the company or asking his wife to resign from Astra. Glaxo even
expressed its desire to retain Tecson in its employ because of his satisfactory performance
and suggested that he ask Bettsy to resign from her company instead. Glaxo likewise acceded
to his repeated requests for more time to resolve the conflict of interest. When the problem
could not be resolved after several years of waiting, Glaxo was constrained to reassign Tecson
to a sales area different from that handled by his wife for Astra. Notably, the Court did not
terminate Tecson from employment but only reassigned him to another area where his home
province, Agusan del Sur, was included. In effecting Tecson’s transfer, Glaxo even considered
the welfare of Tecson’s family. Clearly, the foregoing dispels any suspicion of unfairness and
bad faith on the part of Glaxo.34
WHEREFORE, the Petition is DENIED for lack of merit. Costs against petitioners.
SO ORDERED.
G.R. No. 196573 October 16, 2013
VICTORINO OPINALDO, Petitioner,
vs.
NARCISA RAVINA, Respondent.
DECISION
VILLARAMA, JR., J.:
On appeal under Rule 45 is the Decision1 dated October 19, 2010 and Resolution2 dated March
17, 2011 of the Court of Appeals (CA), Cebu City, in CA-G.R. SP No. 04479 which reversed
and set aside the Decision3 and Resolution4 of the National Labor Relations Commission
(NLRC), Cebu City, and dismissed petitioner s complaint for illegal dismissal against
respondent.
The facts follow.
Respondent Narcisa Ravina (Ravina) is the general manager and sole proprietor of St. Louisse
Security Agency (the Agency). Petitioner Victorino Opinaldo (Opinaldo) is a security guard
who had worked for the Agency until his alleged illegal dismissal by respondent on December
22, 2006.
Agency hired the services of petitioner on October 5, 2005, with a daily salary of ₱176.66 and
detailed him to PAIJR Furniture Accessories (PAIJR) in Mandaue City.5
In a letter dated August 15, 2006, however, the owner of PAIJR submitted a written complaint
to respondent stating as follows:
I have two guards assigned here in my company, namely, SG. Opinaldo and SGT. Sosmenia.
Hence, ... I hereby formalize our request to relieve one of our company guards and I choose
SG. VICTORINO B. OPINALDO, detailed/assigned at PAIJR FURNITURE ACCESSORIES located
at TAWASON, MANDAUE CITY. For the reason: He is no longer physically fit to perform his
duties and responsibilities as a company guard because of his health condition.
Looking forward to your immediate action. Thank you.6
Acceding to PAIJR’s request, respondent relieved petitioner from his work. Respondent also
required petitioner to submit a medical certificate to prove that he is physically and mentally
fit for work as security guard.
On September 6, 2006, respondent reassigned petitioner to Gomez Construction at Mandaue
City. After working for a period of two weeks for Gomez Construction and upon receipt of his
salary for services rendered within the said two-week period, petitioner ceased to report for
work.7 The records show that petitioner’s post at Gomez Construction was the last assignment
given to him by respondent.
On November 7, 2006, petitioner filed a complaint 8 against respondent with the Department
of Labor and Employment (DOLE) Regional Office in Cebu City for underpayment of salary
86
and nonpayment of other labor standard benefits. The parties agreed to settle and reached a
compromise agreement. On November 27, 2006, petitioner signed a Quitclaim and Release 9
before the DOLE Regional Office in Cebu City for the amount of ₱5,000. 10
After almost four weeks from the settlement of the case, petitioner returned to respondent’s
office on December 22, 2006. Petitioner claims that when he asked respondent to sign an
SSS11 Sickness Notification which he was going to use in order to avail of the discounted fees
for a medical check-up, respondent allegedly refused and informed him that he was no longer
an employee of the Agency. Respondent allegedly told him that when he signed the quitclaim
and release form at the DOLE Regional Office, she already considered him to have quit his
employment.12 Respondent, on the other hand, counterclaims that she did not illegally dismiss
petitioner and that it was a valid exercise of management prerogative that he was not given
any assignment pending the submission of the required medical certificate of his fitness to
work.13
On January 26, 2007, petitioner filed a Complaint14 for Illegal Dismissal with a prayer for the
payment of separation pay in lieu of reinstatement against respondent and the Agency before
the NLRC Regional Arbitration Branch No. VII, Cebu City. After trial and hearing, Labor Arbiter
Maria Christina S. Sagmit rendered a Decision15 on June 18, 2008 holding respondent and the
Agency liable for illegal dismissal and ordering them to pay petitioner separation pay and back
wages. The Labor Arbiter ruled,
In the instant case, respondents failed to establish that complainant was dismissed for valid
causes. For one, there is no evidence that complainant was suffering from physical illness
which will explain his lack of assignment. Further, there is no admissible proof that Ravina
even required complainant to submit a medical certificate. Thus, complainant could not be
deemed to have refused or neglected to comply with this order.
xxxx
Considering that there is no evidence that complainant was physically unfit to perform his
duties, respondents must be held liable for illegal dismissal. Ordinarily, complainant will be
entitled to reinstatement and full backwages. However, complainant has expressed his
preference not to be reinstated. Hence, respondents must be ordered to give complainant
separation pay in lieu of reinstatement equivalent to one month’s salary for every year of
service. Complainant is also entitled to full backwages from the time he was terminated until
the date of this Decision. WHEREFORE, respondents Narcisa Ravina and/or St. Louisse
Security Agency are ordered to pay complainant the total amount EIGHTY-TWO THOUSAND
THREE HUNDRED FORTY PESOS (₱82,340.00), consisting of ₱22,500.00 in separation pay
and ₱59,840.00 in full backwages.
SO ORDERED.16
Respondent appealed to the NLRC which, however, affirmed the decision of the Labor Arbiter
and dismissed the appeal for lack of merit.17 The NLRC ruled that there was no just and
authorized cause for dismissal and held that "without a certification from a competent public
authority that petitioner suffers from a disease of such nature or stage that cannot be cured
within a period of six (6) months even with proper medical attendance, respondents are not
justified in refusing petitioner’s presence in the workplace." 18 The NLRC also ruled that neither
did petitioner abandon his job as his failure to work was due to "respondents turning him
down."19 Respondent moved for reconsideration but the motion was denied in a Resolution 20
dated June 30, 2009 where the NLRC reiterated its finding of illegal dismissal given the
absence of any just or authorized cause for the termination of petitioner and the failure to
prove abandonment on his part.
Respondent elevated the case to the CA on a Petition for Certiorari. 21 On October 19, 2010,
the appellate court ruled for respondent and reversed and set aside the decision and resolution
of the NLRC. Ruling on the issue raised by petitioner that respondent’s petition should have
been dismissed outright as her motion for reconsideration before the NLRC was filed out of
time, the appellate court held that the issue was rendered moot and academic when the NLRC
gave due course to the motion and decided the case on the merits. The appellate court further
held that petitioner should have filed his comment or opposition upon the filing of the subject
motion for reconsideration and not after the termination of the proceedings before the NLRC.
As to the issue of illegal dismissal, the appellate court ruled that it was petitioner himself who
failed to report for work and therefore severed his employment with the Agency. The CA
further held that petitioner’s claims relative to his alleged illegal dismissal were not
substantiated. The pertinent portions of the assailed Decision reads,
Based from the evidence on record, the chain of events started when PAIJR sent to Ravina its
15 August 2006 letter-complaint to relieve Opinaldo. This led to Opinaldo’s reassignment to
work for Engr. Gomez on 06 September 2006. Upon his failure to continue working for Engr.
Gomez due to his refusal to obtain a medical certificate, Opinaldo filed the complaint for
money claims on 07 November 2006. This was however settled when Opinaldo and Ravina
signed a quitclaim on 27 November 2006. Still, Opinaldo did not obtain the medical certificate
required by Ravina. Then, Opinaldo’s hasty filing of a complaint for illegal dismissal against
Ravina on 26 January 2007.
xxxx
The requirement to undergo a medical examination is a lawful exercise of management
prerogative on Ravina’s part considering the charges that Opinaldo was not only suffering
from hypertension but was also sleeping while on duty. The management is free to regulate,
according to its own discretion and judgment, all aspects of employment, including hiring,
work assignments, working methods, time, place and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay off of workers and discipline, dismissal and recall of workers.
87
Besides, as a security guard, the need to be physically fit cannot be downplayed. If at all,
Opinaldo’s obstinate refusal to submit his medical certificate is equivalent to willful
disobedience to a lawful order. x x x.
xxxx
Verily, the totality of Opinaldo’s acts justifies the dismissal of his complaint for illegal dismissal
against Ravina. While it is true that the state affirms labor as a primary social economic force,
we are also mindful that the management has rights which must also be respected and
enforced.22
Petitioner moved for reconsideration of the Decision but his motion was denied in the
questioned Resolution of March 17, 2011 on the ground that there are neither cogent reasons
nor new and substantial grounds which would warrant a reversal of the appellate court’s
findings. Hence, petitioner filed this petition alleging that:
I THE HONORABLE COURT OF APPEALS ERRED AND DECIDED THE CASE NOT IN
ACCORDANCE WITH LAW AND ESTABLISHED JURISPRUDENCE WHEN IT GAVE DUE COURSE
TO THE RESPONDENT’S PETITION FOR CERTIORARI UNDER RULE 65 DESPITE BEING FILED
OUT OF TIME AND NOT PROPERLY VERIFIED
II THE HONORABLE COURT OF APPEALS ERRED AND DECIDED THE CASE NOT IN
ACCORDANCE WITH LAW AND ESTABLISHED JURISPRUDENCE WHEN IT REVERSED AND SET
ASIDE THE DECISION AND RESOLUTION OF THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION, FOURTH DIVISION, BY DECLARING THAT THE DISMISSAL OF PETITIONER
WAS LEGAL AND PROPER23
We first rule on the procedural issue.
Petitioner questions the appellate court for ruling that the issue of the timeliness of the filing
of respondent’s motion for reconsideration of the NLRC decision has become moot and
academic when the NLRC dismissed the said motion based on the merits and affirmed its
decision. It is the opinion of petitioner that "this should not and cannot be understood to mean
that the motion for reconsideration was filed within the period allowed," and that "the
Commission may have accommodated the motion for reconsideration although belatedly filed
and had chosen to decide it based on its merits x x x but it does not change the fact that the
motion for reconsideration before the Commission was filed beyond the reglementary
period."24 Petitioner believes that respondent’s filing of the motion for reconsideration on time
is a precondition to the application of the rule that a petition for certiorari must be filed within
60 days from the notice of the denial of the motion for reconsideration. As petitioner puts it,
"the counting of the sixty (60)-day period from the notice of the denial of the motion for
reconsideration is proper only when the motion was filed on time."25
The CA, ruling that the procedural issue is already moot and academic, ratiocinated as follows:
Anent the first issue, Ravina argues that the issue of timeliness of filing a Motion for
Reconsideration with the NLRC has been dispensed with when it resolved to dismiss said
Motion based on the merits and not on the mere technical issue of timeliness. Ravina further
insists that had the NLRC denied said Motion based on the issue of timeliness, it would have
just outrightly dismissed it based on said ground and not on the merits she raised in her
Motion for Reconsideration.
The period within which to file a certiorari petition is 60 days as provided under Section 4,
Rule 65 of the 1997 Rules of Civil Procedure as amended by Circular No. 39-98 and further
amended by A.M. No. 00-2-03-SC, thusly:
SECTION 4. When and where petition filed. – The petition shall be filed not later than sixty
(60) days from notice of the judgment, order or resolution. In case a motion for
reconsideration or new trial is timely filed, whether such motion is required or not, the sixty
(60) day period shall be counted from notice of the denial of said motion.
xxxx
xxxx
To reiterate, the NLRC promulgated its challenged Decision on 24 April 2009. Ravina alleged
that her former counsel received a copy of said decision on 08 June 2009. However, she
changed her counsel who, in turn, obtained a copy of the decision on 17 June 2009. The NLRC
then promulgated its assailed Resolution on 30 June 2009 which Ravina received on 29 July
2009. Ravina’s Petition for Certiorari, dated 28 August 2009, was filed on 09 September 2009.
The reckoning period for the filing of a certiorari petition is sixty (60) days counted from notice
of the denial of said motion. Prescinding from the foregoing, the Petition for Certiorari was
filed within the 60-day period.
At this stage of the proceeding, it is futile to belabor on the timeliness of the Motion for
Reconsideration. This is due to the fact that the issue of timeliness has become moot and
academic considering that Ravina’s Motion for Reconsideration was given due course by the
NLRC. In fact, the NLRC even decided the motion on the merits and not merely on technicality.
Moreover, Opinaldo should have filed a Comment or Opposition as soon as the Motion for
Reconsideration was filed. Opinaldo should not have waited for the termination of the
proceedings before the NLRC. In point of fact, the belated questioning of the issue of
timeliness even operated to estop Opinaldo.26 (Emphasis ours.)
Time and again, we have ruled and it has become doctrine that the perfection of an appeal
within the statutory or reglementary period and in the manner prescribed by law is mandatory
and jurisdictional. Failure to do so renders the questioned decision final and executory and
deprives the appellate court of jurisdiction to alter the final judgment, much less to entertain
the appeal.27 In labor cases, the underlying purpose of this principle is to prevent needless
88
delay, a circumstance which would allow the employer to wear out the efforts and meager
resources of the worker to the point that the latter is constrained to settle for less than what
is due him.28
In the case at bar, the applicable rule on the perfection of an appeal from the decision of the
NLRC is Section 15, Rule VII of the 2005 Revised Rules of Procedure of the National Labor
Relations Commission:
Section 15. Motions for Reconsideration. – Motion for reconsideration of any decision,
resolution or order of the Commission shall not be entertained except when based on palpable
or patent errors; provided that the motion is under oath and filed within ten (10) calendar
days from receipt of decision, resolution or order, with proof of service that a copy of the
same has been furnished, within the reglementary period, the adverse party; and provided
further, that only one such motion from the same party shall be entertained.
Should a motion for reconsideration be entertained pursuant to this SECTION, the resolution
shall be executory after ten (10) calendar days from receipt thereof.
We are not, however, unmindful that the NLRC is not bound by the technical rules of procedure
and is allowed to be liberal in the application of its rules in deciding labor cases. Thus, under
Section 2, Rule I of the 2005 Revised Rules of Procedure of the National Labor Relations
Commission it is stated:
Section 2. Construction. – These Rules shall be liberally construed to carry out the objectives
of the Constitution, the Labor Code of the Philippines and other relevant legislations, and to
assist the parties in obtaining just, expeditious and inexpensive resolution and settlement of
labor disputes.
It is significant that the 2011 NLRC Rules of Procedure, under Section 2, Rule I thereof, also
carries exactly the same provision. Further, the 2005 Revised Rules and the 2011 Rules carry
identical provisions appearing under Section 10, Rule VII of both laws:
Section 10. Technical rules not binding. – The rules of procedure and evidence prevailing in
courts of law and equity shall not be controlling and the Commission shall use every and all
reasonable means to ascertain the facts in each case speedily and objectively, without regard
to technicalities of law or procedure, all in the interest of due process.
In any proceeding before the Commission, the parties may be represented by legal counsel
but it shall be the duty of the Chairman, any Presiding Commissioner or Commissioner to
exercise complete control of the proceedings at all stages.
All said, despite this jurisdiction’s stance towards the exercise of liberality, the rules should
not be relaxed when it would render futile the very purpose for which the principle of liberality
is adopted.29 The liberal interpretation stems from the mandate that the workingman’s welfare
should be the primordial and paramount consideration. 30 We are convinced that the
circumstances in the case at bar warranted the NLRC’s exercise of liberality when it decided
respondent’s motion for reconsideration on the merits.
The subject motion for reconsideration of the NLRC decision was filed on June 25, 2009. The
evidence on record shows that the decision of the NLRC dated April 24, 2009 was received by
respondent herself on June 17, 2009. The same decision was, however, earlier received on
June 8, 2009 by respondent’s former counsel who allegedly did not inform respondent of the
receipt of such decision until respondent went to his office on June 23, 2009 to get the files
of the case. If we follow a strict construction of the ten-day rule under the 2005 Revised Rules
of Procedure of the National Labor Relations Commission and consider notice to respondent’s
former counsel as notice to respondent herself, the expiration of the period to file a motion
for reconsideration should have been on June 18, 2009. The NLRC, however, chose a liberal
application of its rules: it decided the motion on the merits. Nevertheless, it denied
reconsideration.
We defer to the exercise of discretion by the NLRC and uphold its judgment in applying a
liberal construction of its procedural and technical rules to this case in order to ventilate and
resolve the issues raised by respondent in the motion for reconsideration and fully resolve the
case on the merits. It would be purely conjectural to challenge the NLRC’s exercise of such
liberality for being tainted with grave abuse of discretion especially that it did not reverse, but
even affirmed, its questioned decision – which sustained the ruling of the Labor Arbiter – that
respondent illegally dismissed petitioner. In view of such disposition, that the NLRC gave due
course to the motion in the interest of due process and to render a full resolution of the case
on the merits is the more palpable explanation for the liberal application of its rules. It is
significant to note that neither did petitioner ever raise the issue of the NLRC’s ruling on the
merits of the subject motion for reconsideration. And the reason is clear: the motion for
reconsideration was resolved in favor of petitioner. Furthermore, if the NLRC accorded
credibility to the explanation proffered by respondent for its belated filing of the motion, we
cannot now second-guess the NLRC’s judgment in view of the circumstances of the case and
in the absence of any showing that it gravely abused its discretion.
In light of the foregoing, we cannot uphold the stand of petitioner that the petition for
certiorari before the CA was filed out of time, and at the same time rule that the NLRC acted
in the proper exercise of its jurisdiction when it liberally applied its rules and resolved the
motion for reconsideration on the merits. To so hold would nullify the latitude of discretion
towards liberal construction granted to the NLRC under the 2005 Revised Rules of Procedure
of the National Labor Relations Commission – including the decisions and resolutions rendered
in the exercise of such discretion.
Petitioner also claims that the verification in respondent’s petition for certiorari before the CA
suffers from infirmity because it was based only on "personal belief and information." As it is,
petitioner argues that it does not comply with Section 4, 31 Rule 7 of the 1997 Rules on Civil
Procedure, as amended, which requires a pleading to be verified by an affidavit that the affiant
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has read the pleading and that the allegations therein are true and correct of his personal
knowledge or based on authentic records.32 The petition must therefore be considered as an
unsigned pleading producing no legal effect under Section 3, 33 Rule 7 of the Rules and should
have resulted in the outright dismissal of the petition.
It is a matter of procedural consequence in the case at bar that whether we strictly or liberally
apply the technical rules on the requirement of verification in pleadings, the disposition of the
case will be the same. If we sustain petitioner’s stance that the petition before the CA should
have been outrightly dismissed, the NLRC decision finding the dismissal of petitioner as illegal
would have reached finality. On the other hand, if we adopt respondent’s view that the defect
in the verification of the petition is merely a formal defect and is neither jurisdictional nor
fatal, we will be sustaining the appellate court’s giving due course to the petition. However,
on substantive grounds, we reverse the appellate court’s decision and reinstate the finding of
illegal dismissal by the NLRC and the Labor Arbiter.
The appellate court reversed both the NLRC and the Labor Arbiter in consideration of the
following factors: that petitioner did not counter respondent’s receipt of the letter-complaint
of PAIJR relative to his work performance; that petitioner did not refute the fact that
respondent required him to submit a medical certificate; and, that petitioner failed to comply
with the requirement to submit the medical certificate. Hence, when petitioner failed to submit
the required medical certificate, the appellate court found it to be a valid exercise of
management prerogative on the part of respondent not to give petitioner any work
assignment pending its submission.
We do not agree.
Jurisprudence is replete with cases recognizing the right of the employer to have free reign
and enjoy sufficient discretion to regulate all aspects of employment, including the prerogative
to instill discipline in its employees and to impose penalties, including dismissal, upon erring
employees. This is a management prerogative where the free will of management to conduct
its own affairs to achieve its purpose takes form.34 Even labor laws discourage interference
with the exercise of such prerogative and the Court often declines to interfere in legitimate
business decisions of employers.35 However, the exercise of management prerogative is not
unlimited. Managerial prerogatives are subject to limitations provided by law, collective
bargaining agreements, and general principles of fair play and justice.36 Hence, in the exercise
of its management prerogative, an employer must ensure that the policies, rules and
regulations on work-related activities of the employees must always be fair and reasonable
and the corresponding penalties, when prescribed, commensurate to the offense involved and
to the degree of the infraction.37
In the case at bar, we recognize, as did the appellate court, that respondent’s act of requiring
petitioner to undergo a medical examination and submit a medical certificate is a valid
exercise of management prerogative. This is further justified in view of the letter-complaint
from one of respondent’s clients, PAIJR, opining that petitioner was "no longer physically fit
to perform his duties and responsibilities as a company guard because of his health
condition."38 To be sure, petitioner’s job as security guard naturally requires physical and
mental fitness under Section 5 of Republic Act No. 5487, 39 as amended by Presidential Decree
No. 100.40
While the necessity to prove one’s physical and mental fitness to be a security guard could
not be more emphasized, the question to be settled is whether it is a valid exercise of
respondent’s management prerogative to prevent petitioner’s continued employment with the
Agency unless he presents the required medical certificate. Respondent argues, viz.:
Thus, respondents in the exercise of their MANAGEMENT PREROGATIVE required Complainant
to submit a Medical Certificate to prove that he is "PHYSICALLY AND MENTALLY FIT" for work
as Security Guard. Unfortunately, however, up to the present time, complainant failed to
submit said Medical Examination and Findings giving him clean bill of health, to respondents.
Herein respondents are ready and willing to accept him as such Security Guard once he could
submit said Medical Examination and Findings.
The requirement anent the presentation of such MEDICAL CERTIFICATE by Complainant to
Respondents is but a Management Measure of ensuring Respondents including Complainant
that Complainant is physically and mentally fit for continued Employment and will not in any
manner pose a danger or, threat to the respondents’ properties and lives of their customers
and other employees as well as to the person and life of Complainant himself.41
It is utterly significant in the case at bar that a considerably long period has lapsed from
petitioner’s last day of recorded work on September 21, 2006 until he was informed by
respondent on December 22, 2006 that he was no longer an employee of the Agency. In the
words of petitioner, he had been on a "floating status"42 for three months. Within this period,
petitioner did not have any work assignment from respondent who proffers the excuse that
he has not submitted the required medical certificate. While it is a management prerogative
to require petitioner to submit a medical certificate, we hold that respondent cannot withhold
petitioner’s employment without observing the principles of due process and fair play. The
Labor Arbiter and the CA have conflicting findings with respect to the submission of the
medical certificate.
The Labor Arbiter observed that "there is no admissible proof that respondent even required
petitioner to submit a medical certificate. Thus, petitioner could not be deemed to have
refused or neglected to comply with this order."43 The CA countered that while there is no
documentary evidence to prove it, the admission of both parties establishes that there is a
pending requirement for a medical certificate and it was not complied with by petitioner. We
agree with the appellate court that despite the lack of documentary evidence, both parties
have admitted to respondent’s medical certificate requirement. We so hold despite petitioner’s
protestations that what respondent required of him was to submit himself to a medical check-
up, and not to submit a medical certificate. Even if petitioner’s allegation is to be believed,
90
the fact remains that he did not undergo the medical check-up which he himself claims to
have been required by respondent.
All said, what behooves the Court is the lack of evidence on record which establishes that
respondent informed petitioner that his failure to submit the required medical certificate will
result in his lack of work assignment. It is a basic principle of labor protection in this
jurisdiction that a worker cannot be deprived of his job without satisfying the requirements
of due process.44 Labor is property and the right to make it available is next in importance to
the rights of life and liberty.45 As enshrined under the Bill of Rights, no person shall be
deprived of life, liberty or property without due process of law.46 The due process requirement
in the deprivation of one’s employment is transcendental that it limits the exercise of the
management prerogative of the employer to control and regulate the affairs of the business.
In the case at bar, all that respondent employer needed to prove was that petitioner employee
was notified that his failure to submit the required medical certificate will result in his lack of
work assignment – and eventually the termination of his employment – as a security guard.
There is no iota of evidence in the records, save for the bare allegations of respondent, that
petitioner was notified of such consequence for non-submission. In truth, the facts of the case
clearly show that respondent even reassigned petitioner to Gomez Construction from his
PAIJR post despite the non-submission of a medical certificate. If it was indeed the policy of
respondent not to give petitioner any work assignment without the medical certificate, why
was petitioner reassigned despite his noncompliance?
That is not all. In addition to invoking management prerogative as a defense, respondent also
alleges abandonment.1âwphi1 Respondent claims that after petitioner received his last salary
from his assignment with Gomez Construction, he no longer reported for work. The assailed
Decision found that petitioner indeed abandoned his work, viz.:
It was only when Opinaldo refused to report for work on his assignment for Engr. Gomez after
having received his salary for work rendered starting on 06 September 2006 that Ravina
became firm that the medical certificate should be submitted. But, Opinaldo did not heed
Ravina’s order. It was Opinaldo who altogether failed to report for work. 47
We disagree.
Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment.48 To constitute abandonment of work, two elements must concur: (1) the
employee must have failed to report for work or must have been absent without valid or
justifiable reason; and, (2) there must have been a clear intention on the part of the employee
to sever the employer-employee relationship manifested by some overt act.49 None of these
elements is present in the case at bar. As succinctly stated by the NLRC:
From respondents’ own admission in their position paper, it is clear that they prevented
petitioner’s continued employment with them unless the latter presents a medical certificate
that he is physically and mentally fit for work x x x.
xxxx
Moreover, if it was really true that complainant abandoned his work, then why have not
respondents sent him a notice to report back for work? It is evident then that respondents
found an excuse to decline complainant’s continued stay with them on the pretext that he has
to submit first a medical certificate before he could be allowed to resume employment. 50
Finally, respondent harps that she could not be held liable for illegal dismissal because, in the
first place, she did not dismiss petitioner. Respondent maintains that she merely refused to
give petitioner any work assignment until the submission of a medical certificate. On this
issue, the CA concurred with respondent and ruled that petitioner failed to "establish the facts
which would paint the picture that respondent terminated him."51
We need not reiterate that respondent did not properly exercise her management prerogative
when she withheld petitioner’s employment without due process. Respondent failed to prove
that she has notified petitioner that her continuous refusal to provide him any work
assignment was due to his non-submission of the medical certificate. Had respondent
exercised the rules of fair play, petitioner would have had the option of complying or not
complying with the medical certificate requirement – having full knowledge of the
consequences of his actions. Respondent failed to do so and she cannot now hide behind the
defense that there was no illegal termination because petitioner cannot show proof that he
had been illegally dismissed. It is a time-honored legal principle that the employer has the
onus probandi to show that the dismissal or termination was for a just and authorized cause
under the Labor Code. Respondent failed to show that the termination was justified and
authorized, nor was it done as a valid exercise of management prerogative. Given the
circumstances in the case at bar, it is not fair to shift the burden to petitioner, and rule that
he failed to prove his claim, when respondent had successfully terminated the employer-
employee relationship without leaving a paper trail in a clear case o illegal dismissal.
WHEREFORE, the petition for review on certiorari is GRANTED. The assailed Decision dated
October 19 2010 and Resolution dated March 17 2011 o the Court o Appeals in CA-G.R. SP
No. 04479 dismissing petitioner s Complaint for Illegal Dismissal are hereby REVERSED and
SET ASIDE. The Decision and Resolution dated April24, 2009 and June 30, 2009, respectively,
o the NLRC in NLRC Case No. VAC 01-000081-2009 (RAB Case No. Vll-01-0208-2007)
requiring respondent Narcisa Ravina and/or St. Louisse Security Agency to pay petitioner
Victorino Opinaldo the total amount o ₱82,340 consisting o ₱22,500 in separation pay and
₱59,840 in full back wages, are hereby REINSTATED and UPHELD.
No costs.
SO ORDERED.
G.R. No. 170830 August 11, 2010
91
PHIMCO INDUSTRIES, INC., Petitioner,
vs.
PHIMCO INDUSTRIES LABOR ASSOCIATION (PILA), and ERLINDA VAZQUEZ,
RICARDO SACRISTAN, LEONIDA CATALAN, MAXIMO PEDRO, NATHANIELA
DIMACULANGAN,* RODOLFO MOJICO, ROMEO CARAMANZA, REYNALDO GANITANO,
ALBERTO BASCONCILLO,** and RAMON FALCIS, in their capacity as officers of PILA,
and ANGELITA BALOSA,*** DANILO BANAAG, ABRAHAM CADAY, ALFONSO
CLAUDIO, FRANCISCO DALISAY,**** ANGELITO DEJAN,***** PHILIP GARCES,
NICANOR ILAGAN, FLORENCIO LIBONGCOGON, ****** NEMESIO MAMONONG,
TEOFILO MANALILI, ALFREDO PEARSON,******** MARIO PEREA,******** RENATO
RAMOS, MARIANO ROSALES, PABLO SARMIENTO, RODOLFO TOLENTINO, FELIPE
VILLAREAL, ARSENIO ZAMORA, DANILO BALTAZAR, ROGER CABER, *********
REYNALDO CAMARIN, BERNARDO CUADRA,**********ANGELITO DE GUZMAN,
GERARDO FELICIANO,*********** ALEX IBAÑEZ, BENJAMIN JUAN, SR., RAMON
MACAALAY, GONZALO MANALILI, RAUL MICIANO, HILARIO PEÑA, TERESA
PERMOCILLO,************ERNESTO RIO, RODOLFO SANIDAD, RAFAEL STA. ANA,
JULIAN TUGUIN and AMELIA ZAMORA, as members of PILA, Respondents.
DECISION
BRION, J.:
Before us is the petition for review on certiorari 1 filed by petitioner Phimco Industries, Inc.
(PHIMCO), seeking to reverse and set aside the decision, 2 dated February 10, 2004, and the
resolution,3 dated December 12, 2005, of the Court of Appeals (CA) in CA-G.R. SP No. 70336.
The assailed CA decision dismissed PHIMCO’s petition for certiorari that challenged the
resolution, dated December 29, 1998, and the decision, dated February 20, 2002, of the
National Labor Relations Commission (NLRC); the assailed CA resolution denied PHIMCO’s
subsequent motion for reconsideration.
FACTUAL BACKGROUND
The facts of the case, gathered from the records, are briefly summarized below.
PHIMCO is a corporation engaged in the production of matches, with principal address at
Phimco Compound, Felix Manalo St., Sta. Ana, Manila. Respondent Phimco Industries Labor
Association (PILA) is the duly authorized bargaining representative of PHIMCO’s daily-paid
workers. The 47 individually named respondents are PILA officers and members.
When the last collective bargaining agreement was about to expire on December 31, 1994,
PHIMCO and PILA negotiated for its renewal. The negotiation resulted in a deadlock on
economic issues, mainly due to disagreements on salary increases and benefits.
On March 9, 1995, PILA filed with the National Conciliation and Mediation Board (NCMB) a
Notice of Strike on the ground of the bargaining deadlock. Seven (7) days later, or on March
16, 1995, the union conducted a strike vote; a majority of the union members voted for a
strike as its response to the bargaining impasse. On March 17, 1995, PILA filed the strike vote
results with the NCMB. Thirty-five (35) days later, or on April 21, 1995, PILA staged a strike.
On May 3, 1995, PHIMCO filed with the NLRC a petition for preliminary injunction and
temporary restraining order (TRO), to enjoin the strikers from preventing – through force,
intimidation and coercion – the ingress and egress of non-striking employees into and from
the company premises. On May 15, 1995, the NLRC issued an ex-parte TRO, effective for a
period of twenty (20) days, or until June 5, 1995.
On June 23, 1995, PHIMCO sent a letter to thirty-six (36) union members, directing them to
explain within twenty-four (24) hours why they should not be dismissed for the illegal acts
they committed during the strike. Three days later, or on June 26, 1995, the thirty-six (36)
union members were informed of their dismissal.
On July 6, 1995, PILA filed a complaint for unfair labor practice and illegal dismissal (illegal
dismissal case) with the NLRC. The case was docketed as NLRC NCR Case No. 00-07-04705-
95, and raffled to Labor Arbiter (LA) Pablo C. Espiritu, Jr.
On July 7, 1995, then Acting Labor Secretary Jose S. Brillantes assumed jurisdiction over the
labor dispute, and ordered all the striking employees (except those who were handed
termination papers on June 26, 1995) to return to work within twenty-four (24) hours from
receipt of the order. The Secretary ordered PHIMCO to accept the striking employees, under
the same terms and conditions prevailing prior to the strike. 4 On the same day, PILA ended
its strike.
On August 28, 1995, PHIMCO filed a Petition to Declare the Strike Illegal (illegal strike case)
with the NLRC, with a prayer for the dismissal of PILA officers and members who knowingly
participated in the illegal strike. PHIMCO claimed that the strikers prevented ingress to and
egress from the PHIMCO compound, thereby paralyzing PHIMCO’s operations. The case was
docketed as NLRC NCR Case No. 00-08-06031-95, and raffled to LA Jovencio Ll. Mayor.
On March 14, 1996, the respondents filed their Position Paper in the illegal strike case. They
countered that they complied with all the legal requirements for the staging of the strike, they
put up no barricade, and conducted their strike peacefully, in an orderly and lawful manner,
without incident.
LA Mayor decided the case on February 4, 1998, 5 and found the strike illegal; the respondents
committed prohibited acts during the strike by blocking the ingress to and egress from
PHIMCO’s premises and preventing the non-striking employees from reporting for work. He
observed that it was not enough that the picket of the strikers was a moving picket, since the
strikers should allow the free passage to the entrance and exit points of the company
92
premises. Thus, LA Mayor declared that the respondent employees, PILA officers and
members, have lost their employment status.
On March 5, 1998, PILA and its officers and members appealed LA Mayor’s decision to the
NLRC.
THE NLRC RULING
The NLRC decided the appeal on December 29, 1998, and set aside LA Mayor’s decision. 6 The
NLRC did not give weight to PHIMCO’s evidence, and relied instead on the respondents’
evidence showing that the union conducted a peaceful moving picket.
On January 28, 1999, PHIMCO filed a motion for reconsideration in the illegal strike case. 7 prohibited acts under Article 264(e) of the Labor Code, such as blocking the ingress and
In a parallel development, LA Espiritu decided the union’s illegal dismissal case on March 2,
1999. He ruled the respondents’ dismissal as illegal, and ordered their reinstatement with
payment of backwages. PHIMCO appealed LA Espiritu’s decision to the NLRC.
Pending the resolution of PHIMCO’s motion for reconsideration in the illegal strike case and
the appeal of the illegal dismissal case, PHIMCO moved for the consolidation of the two (2)
cases. The NLRC acted favorably on the motion and consolidated the two (2) cases in its Order
dated August 5, 1999.
On February 20, 2002, the NLRC rendered its Decision in the consolidated cases, ruling totally
in the union’s favor.8 It dismissed the appeal of the illegal dismissal case, and denied
PHIMCO’s motion for reconsideration in the illegal strike case. The NLRC found that the picket
conducted by the striking employees was not an illegal blockade and did not obstruct the
points of entry to and exit from the company’s premises; the pictures submitted by the
respondents revealed that the picket was moving, not stationary. With respect to the illegal
dismissal charge, the NLRC observed that the striking employees were not given ample
opportunity to explain their side after receipt of the June 23, 1995 letter. Thus, the NLRC
affirmed the Decision of LA Espiritu with respect to the payment of backwages until the
promulgation of the decision, plus separation pay at one (1) month salary per year of service
in lieu of reinstatement, and 10% of the monetary award as attorney’s fees. It ruled out
reinstatement because of the damages sustained by the company brought about by the strike.
On March 14, 2002, PHIMCO filed a motion for reconsideration of the consolidated decision.
On April 26, 2002, without waiting for the result of its motion for reconsideration, PHIMCO
elevated its case to the CA through a petition for certiorari under Rule 65 of the Rules of
Court.9
THE CA RULING
In a Decision10 promulgated on February 10, 2004, the CA dismissed PHIMCO’s petition for
certiorari. The CA noted that the NLRC findings, that the picket was peaceful and that
PHIMCO’s evidence failed to show that the picket constituted an illegal blockade or that it
obstructed the points of entry to and exit from the company premises, were supported by
substantial evidence.
PHIMCO came to us through the present petition after the CA denied 11 PHIMCO’s motion for
reconsideration.12
THE PETITION
The petitioner argues that the strike was illegal because the respondents committed the
egress of the company premises, threat, coercion, and intimidation, as established by the
evidence on record.
THE CASE FOR THE RESPONDENTS
The respondents, on the other hand, submit that the issues raised in this case are factual in
nature that we cannot generally touch in a petition for review, unless compelling reasons
exist; the company has not shown any such compelling reason as the picket was peaceful and
uneventful, and no human barricade blocked the company premises.
THE ISSUE
In Montoya v. Transmed Manila Corporation,13 we laid down the basic approach that should
be followed in the review of CA decisions in labor cases, thus:
In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with
the review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45
limits us to the review of questions of law raised against the assailed CA decision. In ruling
for legal correctness, we have to view the CA decision in the same context that the petition
for certiorari it ruled upon was presented to it; we have to examine the CA decision from the
prism of whether it correctly determined the presence or absence of grave abuse of discretion
in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits
of the case was correct. In other words, we have to be keenly aware that the CA undertook a
Rule 65 review, not a review on appeal, of the NLRC decision challenged before it. This is the
approach that should be basic in a Rule 45 review of a CA ruling in a labor case. In question
form, the question to ask is: Did the CA correctly determine whether the NLRC committed
grave abuse of discretion in ruling on the case?
In this light, the core issue in the present case is whether the CA correctly ruled that the NLRC
did not act with grave abuse of discretion in ruling that the union’s strike was legal.
93
OUR RULING
We find the petition partly meritorious.
Requisites of a valid strike
A strike is the most powerful weapon of workers in their struggle with management in the
course of setting their terms and conditions of employment. Because it is premised on the
concept of economic war between labor and management, it is a weapon that can either
breathe life to or destroy the union and its members, and one that must also necessarily
affect management and its members.14
In light of these effects, the decision to declare a strike must be exercised responsibly and
must always rest on rational basis, free from emotionalism, and unswayed by the tempers
and tantrums of hot heads; it must focus on legitimate union interests. To be legitimate, a
strike should not be antithetical to public welfare, and must be pursued within legal bounds.
The right to strike as a means of attaining social justice is never meant to oppress or destroy
anyone, least of all, the employer.15
Since strikes affect not only the relationship between labor and management but also the
general peace and progress of the community, the law has provided limitations on the right
to strike. Procedurally, for a strike to be valid, it must comply with Article 263 16 of the Labor
Code, which requires that: (a) a notice of strike be filed with the Department of Labor and
Employment (DOLE) 30 days before the intended date thereof, or 15 days in case of unfair
labor practice; (b) a strike vote be approved by a majority of the total union membership in
the bargaining unit concerned, obtained by secret ballot in a meeting called for that purpose;
and (c) a notice be given to the DOLE of the results of the voting at least seven days before
the intended strike.
These requirements are mandatory, and the union’s failure to comply renders the strike
illegal.17 The 15 to 30-day cooling-off period is designed to afford the parties the opportunity
to amicably resolve the dispute with the assistance of the NCMB conciliator/mediator, while
the seven-day strike ban is intended to give the DOLE an opportunity to verify whether the
projected strike really carries the imprimatur of the majority of the union members. 18
In the present case, the respondents fully satisfied the legal procedural requirements; a strike
notice was filed on March 9, 1995; a strike vote was reached on March 16, 1995; notification
of the strike vote was filed with the DOLE on March 17, 1995; and the actual strike was
launched only on April 25, 1995.
Strike may be illegal for commission of prohibited acts
Despite the validity of the purpose of a strike and compliance with the procedural
requirements, a strike may still be held illegal where the means employed are illegal.19 The
means become illegal when they come within the prohibitions under Article 264(e) of the
Labor Code which provides:
No person engaged in picketing shall commit any act of violence, coercion or intimidation or
obstruct the free ingress to or egress from the employer's premises for lawful purposes, or
obstruct public thoroughfares.
Based on our examination of the evidence which the LA viewed differently from the
NLRC and the CA, we find the PILA strike illegal. We intervene and rule even on the
evidentiary and factual issues of this case as both the NLRC and the CA grossly misread the
evidence, leading them to inordinately incorrect conclusions, both factual and legal. While the
strike undisputably had not been marred by actual violence and patent intimidation, the
picketing that respondent PILA officers and members undertook as part of their strike
activities effectively blocked the free ingress to and egress from PHIMCO’s premises, thus
preventing non-striking employees and company vehicles from entering the PHIMCO
compound. In this manner, the picketers violated Article 264(e) of the Labor Code.
The Evidence
We gather from the case record the following pieces of relevant evidence adduced in the
compulsory arbitration proceedings.20
For the Company
1. Pictures taken during the strike, showing that the respondents prevented free
ingress to and egress from the company premises;21
2. Affidavit of PHIMCO Human Resources Manager Francis Ferdinand Cinco, stating
that he was one of the employees prevented by the strikers from entering the PHIMCO
premises;22
3. Affidavit of Cinco, identifying Erlinda Vazquez, Ricardo Sacristan, Leonida Catalan,
Maximo Pedro, Nathaniela R. Dimaculangan, Rodolfo Mojico, Romeo Caramanza,
Reynaldo Ganitano, Alberto Basconcillo, and Ramon Falcis as PILA officers; 23
4. Affidavit of Cinco identifying other members of PILA;24
5. Folder 1, containing pictures taken during the strike identifying and showing Leonida
Catalan, Renato Ramos, Arsenio Zamora, Reynaldo Ganitano, Amelia Zamora, Angelito
Dejan, Teresa Permocillo, and Francisco Dalisay as the persons preventing Cinco and
his group from entering the company premises; 25
94
 6. Folder 2, with pictures taken on May 30, 1995, showing Cinco, together with non-
striking PHIMCO employees, reporting for work but being refused entry by strikers
Teofilo Manalili, Nathaniela Dimaculangan, Bernando Cuadra, Maximo Pedro, Nicanor
Ilagan, Julian Tuguin, Nemesio Mamonong, Abraham Caday, Ernesto Rio, Benjamin
Juan, Sr., Ramon Macaalay, Gerardo Feliciano, Alberto Basconcillo, Rodolfo Sanidad,
Mariano Rosales, Roger Caber, Angelito de Guzman, Angelito Balosa and Philip Garces
who blocked the company gate;26
7. Folder 3, with pictures taken on May 30, 1995, showing the respondents denying
free ingress to and egress from the company premises;27
8. Folder 4, with pictures taken during the strike, showing that non-striking employees
failed to enter the company premises as a result of the respondents’ refusal to let them
in;28
9. Affidavit of Joaquin Aguilar stating that the pictures presented by Cinco were taken
during the strike;29
10. Pictures taken by Aguilar during the strike, showing non-striking employees being
refused entry by the respondents;30
11. Joint affidavit of Orlando Marfil and Rodolfo Digo, identifying the pictures they took
during the strike, showing that the respondents blocked ingress to and egress from
the company premises;31 and,
12. Testimonies of PHIMCO employees Rodolfo Eva, Aguilar and Cinco, as well as those
of PILA officers Maximo Pedro and Leonida Catalan.
For the Respondents
1. Affidavit of Leonida Catalan, stating that the PILA strike complied with all the legal
requirements, and the strike/picket was conducted peacefully with no incident of any
illegality;32
2. Affidavit of Maximo Pedro, stating that the strike/picket was conducted peacefully;
the picket was always moving with no acts of illegality having been committed during
the strike;33
3. Certification of Police Station Commander Bienvenido de los Reyes that during the
strike there was no report of any untoward incident;34
4. Certification of Rev. Father Erick Adeviso of Dambanang Bayan Parish Church that
the strike was peaceful and without any untoward incident; 35
5. Certification of Priest-In-Charge Angelito Fausto of the Philippine Independent
Church in Punta, Santa Ana, that the strike complied with all the requirements for a
lawful strike, and the strikers conducted themselves in a peaceful manner;36
6. Clearance issued by Punong Barangay Mario O. dela Rosa and Barangay Secretary
Pascual Gesmundo, Jr. that the strike from April 21 to July 7, 1995 was conducted in
an orderly manner with no complaints filed;37 and,
7. Testimonies at the compulsory arbitration proceedings.
In its resolution of December 29, 1998,38 the NLRC declared that "the string of proofs" the
company presented was "overwhelmingly counterbalanced by the numerous pieces of
evidence adduced by respondents x x x all depicting a common story that respondents put up
a peaceful moving picket, and did not commit any illegal acts x x x specifically obstructing
the ingress to and egress from the company premises[.]"39
We disagree with this finding as the purported "peaceful moving picket" upon which the NLRC
resolution was anchored was not an innocuous picket, contrary to what the NLRC said it was;
the picket, under the evidence presented, did effectively obstruct the entry and exit points of
the company premises on various occasions.
To strike is to withhold or to stop work by the concerted action of employees as a result of an
industrial or labor dispute.40 The work stoppage may be accompanied by picketing by the
striking employees outside of the company compound. While a strike focuses on stoppage of
work, picketing focuses on publicizing the labor dispute and its incidents to inform the public
of what is happening in the company struck against. A picket simply means to march to and
from the employer’s premises, usually accompanied by the display of placards and other signs
making known the facts involved in a labor dispute. 41 It is a strike activity separate and
different from the actual stoppage of work.
grievances,43 these rights are by no means absolute. Protected picketing does not extend to
blocking ingress to and egress from the company premises.44 That the picket was moving,
was peaceful and was not attended by actual violence may not free it from taints of illegality
if the picket effectively blocked entry to and exit from the company premises.
In this regard, PHIMCO employees Rodolfo Eva and Joaquin Aguilar, and the company’s
Human Resources Manager Francis Ferdinand Cinco testified during the compulsory
arbitration hearings:
ATTY. REYES: this incident on May 22, 1995, when a coaster or bus attempted to enter
PHIMCO compound, you mentioned that it was refused entry. Why was this (sic) it refused
entry?
95
WITNESS: Because at that time, there was a moving picket at the gate that is why the bus
was not able to enter.45
xxxx
Q: Despite this TRO, which was issued by the NLRC, were you allowed entry by the
strikers?
A: We made several attempts to enter the compound, I remember on May 7, 1995,
we tried to enter the PHIMCO compound but we were not allowed entry.
Q: Aside from May 27, 1995, were there any other instances wherein you were not
allowed entry at PHIMCO compound?
A: On May 29, I recall I was riding with our Production Manager with the Pick-up. We
tried to enter but we were not allowed by the strikers.46
xxxx
ARBITER MAYOR: How did the strikers block the ingress of the company?
A: They hold around, joining hands, moving picket.47
xxxx
ARBITER MAYOR: Reform the question, and because of that moving picket conducted
by the strikers, no employees or vehicles can come in or go out of the premises?
A: None, sir.48
These accounts were confirmed by the admissions of respondent PILA officers Maximo Pedro
and Leonida Catalan that the strikers prevented non-striking employees from entering the
company premises. According to these union officers:
ATTY. CHUA: Mr. witness, do you recall an incident when a group of managers of
PHIMCO, with several of the monthly paid employees who tried to enter the PHIMCO
compound during the strike?
MR. PEDRO: Yes, sir.
ATTY. CHUA: Can you tell us if these (sic) group of managers headed by Francis Cinco
entered the compound of PHIMCO on that day, when they tried to enter?
MR. PEDRO: No, sir. They were not able to enter.49
xxxx
ATTY. CHUA: Despite having been escorted by police Delos Reyes, you still did not give
way, and instead proceeded with your moving picket?
MR. PEDRO: Yes, sir.
ATTY. CHUA: In short, these people were not able to enter the premises of PHIMCO,
Yes or No.
MR. PEDRO: Yes, sir. 50
xxxx
ATTY. CHUA: Madam witness, even if Major Delos Reyes instructed you to give way so
as to allow the employees and managers to enter the premises, you and your co-
employees did not give way?
MS. CATALAN: No sir.
ATTY. CHUA: the managers and the employees were not able to enter the premises?
MS. CATALAN: Yes, sir.51
The NLRC resolution itself noted the above testimonial evidence, "all building up a scenario
that the moving picket put up by [the] respondents obstructed the ingress to and egress from
the company premises[,]"52 yet it ignored the clear import of the testimonies as to the true
nature of the picket. Contrary to the NLRC characterization that it was a "peaceful moving
picket," it stood, in fact, as an obstruction to the company’s points of ingress and egress.
Significantly, the testimonies adduced were validated by the photographs taken of the strike
area, capturing the strike in its various stages and showing how the strikers actually
conducted the picket. While the picket was moving, it was maintained so close to the company
gates that it virtually constituted an obstruction, especially when the strikers joined hands,
as described by Aguilar, or were moving in circles, hand-to-shoulder, as shown by the
photographs, that, for all intents and purposes, blocked the free ingress to and egress from
the company premises. In fact, on closer examination, it could be seen that the respondents
were conducting the picket right at the company gates.53
96
The obstructive nature of the picket was aggravated by the placement of benches, with
strikers standing on top, directly in front of the open wing of the company gates, clearly
obstructing the entry and exit points of the company compound.54
With a virtual human blockade and real physical obstructions (benches and makeshift
structures both outside and inside the gates),55 it was pure conjecture on the part of the NLRC
to say that "[t]he non-strikers and their vehicles were x x x free to get in and out of the
company compound undisturbed by the picket line."56 Notably, aside from non-strikers who
wished to report for work, company vehicles likewise could not enter and get out of the factory
because of the picket and the physical obstructions the respondents installed. The blockade
went to the point of causing the build up of traffic in the immediate vicinity of the strike area,
as shown by photographs.57 This, by itself, renders the picket a prohibited activity. Pickets
may not aggressively interfere with the right of peaceful ingress to and egress from the
employer’s shop or obstruct public thoroughfares; picketing is not peaceful where the sidewalk
or entrance to a place of business is obstructed by picketers parading around in a circle or
lying on the sidewalk.58
What the records reveal belies the NLRC observation that "the evidence x x x tends to show
that what respondents actually did was walking or patrolling to and fro within the company
vicinity and by word of mouth, banner or placard, informing the public concerning the
dispute."59
The "peaceful moving picket" that the NLRC noted, influenced apparently by the certifications
(Mayor delos Reyes, Fr. Adeviso, Fr. Fausto and Barangay Secretary Gesmundo presented in
evidence by the respondents, was "peaceful" only because of the absence of violence during
the strike, but the obstruction of the entry and exit points of the company premises caused
by the respondents’ picket was by no means a "petty blocking act" or an "insignificant
obstructive act."60
As we have stated, while the picket was moving, the movement was in circles, very close to
the gates, with the strikers in a hand-to-shoulder formation without a break in their ranks,
thus preventing non-striking workers and vehicles from coming in and getting out. Supported
by actual blocking benches and obstructions, what the union demonstrated was a very
persuasive and quietly intimidating strategy whose chief aim was to paralyze the operations
of the company, not solely by the work stoppage of the participating workers, but by excluding
the company officials and non-striking employees from access to and exit from the company
premises. No doubt, the strike caused the company operations considerable damage, as the
NLRC itself recognized when it ruled out the reinstatement of the dismissed strikers. 61
Intimidation
Article 264(e) of the Labor Code tells us that picketing carried on with violence, coercion or
intimidation is unlawful.62 According to American jurisprudence, what constitutes unlawful
intimidation depends on the totality of the circumstances.63 Force threatened is the equivalent
of force exercised. There may be unlawful intimidation without direct threats or overt acts of
violence. Words or acts which are calculated and intended to cause an ordinary person to fear
an injury to his person, business or property are equivalent to threats.64
The manner in which the respondent union officers and members conducted the picket in the
present case had created such an intimidating atmosphere that non-striking employees and
even company vehicles did not dare cross the picket line, even with police intervention. Those
who dared cross the picket line were stopped. The compulsory arbitration hearings bear this
out.
Maximo Pedro, a PILA officer, testified, on July 30, 1997, that a group of PHIMCO managers
led by Cinco, together with several monthly-paid employees, tried to enter the company
premises on May 27, 1995 with police escort; even then, the picketers did not allow them to
enter.65Leonida Catalan, another union officer, testified that she and the other picketers did
not give way despite the instruction of Police Major de los Reyes to the picketers to allow the
group to enter the company premises.66 (To be sure, police intervention and participation are,
as a rule, prohibited acts in a strike, but we note this intervention solely as indicators of how
far the union and its members have gone to block ingress to and egress from the company
premises.)
Further, PHIMCO employee Rodolfo Eva testified that on May 22, 1995, a company coaster or
bus attempted to enter the PHIMCO compound but it was refused entry by the "moving
picket."67 Cinco, the company personnel manager, also testified that on May 27, 1995, when
the NLRC TRO was in force, he and other employees tried to enter the PHIMCO compound,
but they were not allowed entry; on May 29, 1995, Cinco was with the PHIMCO production
manager in a pick-up and they tried to enter the company compound but, again, they were
not allowed by the strikers.68 Another employee, Joaquin Aguilar, when asked how the strikers
blocked the ingress of the company, replied that the strikers "hold around, joining hands,
moving picket" and, because of the moving picket, no employee or vehicle could come in and
go out of the premises.69
The evidence adduced in the present case cannot be ignored. On balance, it supports the
company’s submission that the respondent PILA officers and members committed acts during
the strike prohibited under Article 264(e) of the Labor Code. The testimonies of non-striking
employees, who were prevented from gaining entry into the company premises, and
confirmed no less by two officers of the union, are on record.
The photographs of the strike scene, also on record, depict the true character of the picket;
while moving, it, in fact, constituted a human blockade, obstructing free ingress to and egress
from the company premises, reinforced by benches planted directly in front of the company
gates. The photographs do not lie – these photographs clearly show that the picketers were
going in circles, without any break in their ranks or closely bunched together, right in front of
the gates. Thus, company vehicles were unable to enter the company compound, and were
backed up several meters into the street leading to the company gates.
97
Despite all these clear pieces of evidence of illegal obstruction, the NLRC looked the other
way and chose not to see the unmistakable violations of the law on strikes by the union and
its respondent officers and members. Needless to say, while the law protects the rights of the
laborer, it authorizes neither the oppression nor the destruction of the employer. 70 For grossly
ignoring the evidence before it, the NLRC committed grave abuse of discretion; for supporting
these gross NLRC errors, the CA committed its own reversible error.
Liabilities of union officers and members
In the determination of the liabilities of the individual respondents, the applicable provision is
Article 264(a) of the Labor Code:
Art. 264. Prohibited activities. – (a) x x x
xxxx
Any union officer who knowingly participates in an illegal strike and any worker or union officer
who knowingly participates in the commission of illegal acts during a strike may be declared
to have lost his employment status: Provided, That mere participation of a worker in a lawful
strike shall not constitute sufficient ground for termination of his employment, even if a
replacement had been hired by the employer during such lawful strike.
We explained in Samahang Manggagawa sa Sulpicio Lines, Inc.-NAFLU v. Sulpicio Lines, Inc.71
that the effects of illegal strikes, outlined in Article 264 of the Labor Code, make a distinction
between participating workers and union officers. The services of an ordinary striking worker
cannot be terminated for mere participation in an illegal strike; proof must be adduced
showing that he or she committed illegal acts during the strike. The services of a participating
union officer, on the other hand, may be terminated, not only when he actually commits an
illegal act during a strike, but also if he knowingly participates in an illegal strike. 72
In all cases, the striker must be identified. But proof beyond reasonable doubt is not required;
substantial evidence, available under the attendant circumstances, suffices to justify the
imposition of the penalty of dismissal on participating workers and union officers as above
described.73
In the present case, respondents Erlinda Vazquez, Ricardo Sacristan, Leonida Catalan,
Maximo Pedro, Nathaniela Dimaculangan, Rodolfo Mojico, Romeo Caramanza, Reynaldo
Ganitano, Alberto Basconcillo, and Ramon Falcis stand to be dismissed as participating
union officers, pursuant to Article 264(a), paragraph 3, of the Labor Code. This provision
imposes the penalty of dismissal on "any union officer who knowingly participates in an illegal
strike." The law grants the employer the option of declaring a union officer who participated
in an illegal strike as having lost his employment.74
PHIMCO was able to individually identify the participating union members thru the
affidavits of PHIMCO employees Martimer Panis75 and Rodrigo A. Ortiz,76 and Personnel
Manager Francis Ferdinand Cinco,77 and the photographs78 of Joaquin Aguilar. Identified were
respondents Angelita Balosa, Danilo Banaag, Abraham Caday, Alfonso Claudio, Francisco
Dalisay, Angelito Dejan, Philip Garces, Nicanor Ilagan, Florencio Libongcogon, Nemesio
Mamonong, Teofilo Manalili, Alfredo Pearson, Mario Perea, Renato Ramos, Mariano Rosales,
Pablo Sarmiento, Rodolfo Tolentino, Felipe Villareal, Arsenio Zamora, Danilo Baltazar, Roger
Caber, Reynaldo Camarin, Bernardo Cuadra, Angelito de Guzman, Gerardo Feliciano, Alex
Ibañez, Benjamin Juan, Sr., Ramon Macaalay, Gonzalo Manalili, Raul Miciano, Hilario Peña,
Teresa Permocillo, Ernesto Rio, Rodolfo Sanidad, Rafael Sta. Ana, Julian Tuguin and Amelia
Zamora as the union members who actively participated in the strike by blocking the ingress
to and egress from the company premises and preventing the passage of non-striking
employees. For participating in illegally blocking ingress to and egress from company
premises, these union members stand to be dismissed for their illegal acts in the conduct of
the union’s strike.
PHIMCO failed to observe due process
We find, however, that PHIMCO violated the requirements of due process of the Labor Code
when it dismissed the respondents.
Under Article 277(b)79 of the Labor Code, the employer must send the employee, who is about
to be terminated, a written notice stating the cause/s for termination and must give the
employee the opportunity to be heard and to defend himself.
We explained in Suico v. National Labor Relations Commission,80 that Article 277(b), in
relation to Article 264(a) and (e) of the Labor Code recognizes the right to due process of all
workers, without distinction as to the cause of their termination, even if the cause was their
supposed involvement in strike-related violence prohibited under Article 264(a) and (e) of the
Labor Code.
To meet the requirements of due process in the dismissal of an employee, an employer must
furnish him or her with two (2) written notices: (1) a written notice specifying the grounds
for termination and giving the employee a reasonable opportunity to explain his side and (2)
another written notice indicating that, upon due consideration of all circumstances, grounds
have been established to justify the employer's decision to dismiss the employee. 81
In the present case, PHIMCO sent a letter, on June 23, 1995, to thirty-six (36) union
members, generally directing them to explain within twenty-four (24) hours why they should
not be dismissed for the illegal acts they committed during the strike; three days later, or on
June 26, 1995, the thirty-six (36) union members were informed of their dismissal from
employment.1avvphi1
98
We do not find this company procedure to be sufficient compliance with the due process
requirements that the law guards zealously. It does not appear from the evidence that the
union officers were specifically informed of the charges against them and given the chance to
explain and present their side. Without the specifications they had to respond to, they were
arbitrarily separated from work in total disregard of their rights to due process and security
of tenure.
As to the union members, only thirty-six (36) of the thirty-seven (37) union members included
in this case were notified of the charges against them thru the letters dated June 23, 1995,
but they were not given an ample opportunity to be heard and to defend themselves; the
notice of termination came on June 26, 1995, only three (3) days from the first notice - a
perfunctory and superficial attempt to comply with the notice requirement under the Labor
Code. The short interval of time between the first and second notice speaks for itself under
the circumstances of this case; mere token recognition of the due process requirements was
made, indicating the company’s intent to dismiss the union members involved, without any
meaningful resort to the guarantees accorded them by law.
Under the circumstances, where evidence sufficient to justify the penalty of dismissal has
been adduced but the workers concerned were not accorded their essential due process rights,
our ruling in Agabon v. NLRC82 finds full application; the employer, despite the just cause for
dismissal, must pay the dismissed workers nominal damages as indemnity for the violation of
the workers’ right to statutory due process. Prevailing jurisprudence sets the amount of
nominal damages at ₱30,000.00, which same amount we find sufficient and appropriate in
the present case.83
WHEREFORE, in light of all the foregoing, we hereby REVERSE and SET ASIDE the decision
dated February 10, 2004 and the resolution dated December 12, 2005 of the Court of Appeals
in CA-G.R. SP No. 70336, upholding the rulings of the National Labor Relations Commission.
The Decision, dated February 4, 1998, of Labor Arbiter Jovencio Ll. Mayor should prevail and
is REINSTATED with the MODIFICATION that Erlinda Vazquez, Ricardo Sacristan, Leonida
Catalan, Maximo Pedro, Nathaniela Dimaculangan, Rodolfo Mojico, Romeo Caramanza,
Reynaldo Ganitano, Alberto Basconcillo, Ramon Falcis, Angelita Balosa, Danilo Banaag,
Abraham Caday, Alfonso Claudio, Francisco Dalisay, Angelito Dejan, Philip Garces, Nicanor
Ilagan, Florencio Libongcogon, Nemesio Mamonong, Teofilo Manalili, Alfredo Pearson, Mario
Perea, Renato Ramos, Mariano Rosales, Pablo Sarmiento, Rodolfo Tolentino, Felipe Villareal,
Arsenio Zamora, Danilo Baltazar, Roger Caber, Reynaldo Camarin, Bernardo Cuadra, Angelito
de Guzman, Gerardo Feliciano, Alex Ibañez, Benjamin Juan, Sr., Ramon Macaalay, Gonzalo
Manalili, Raul Miciano, Hilario Peña, Teresa Permocillo, Ernesto Rio, Rodolfo Sanidad, Rafael
Sta. Ana, Julian Tuguin, and Amelia Zamora are each awarded nominal damages in the
amount of ₱30,000.00. No pronouncement as to costs.
SO ORDERED.
G.R. No. 164301 August 10, 2010
BANK OF THE PHILIPPINE ISLANDS, Petitioner,
vs.
BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI
UNIBANK, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
May a corporation invoke its merger with another corporation as a valid ground to exempt its
"absorbed employees" from the coverage of a union shop clause contained in its existing
Collective Bargaining Agreement (CBA) with its own certified labor union? That is the question
we shall endeavor to answer in this petition for review filed by an employer after the Court of
Appeals decided in favor of respondent union, which is the employees’ recognized collective
bargaining representative.
At the outset, we should call to mind the spirit and the letter of the Labor Code provisions on
union security clauses, specifically Article 248 (e), which states, "x x x Nothing in this Code
or in any other law shall stop the parties from requiring membership in a recognized collective
bargaining agent as a condition for employment, except those employees who are already
members of another union at the time of the signing of the collective bargaining agreement." 1
This case which involves the application of a collective bargaining agreement with a union
shop clause should be resolved principally from the standpoint of the clear provisions of our
labor laws, and the express terms of the CBA in question, and not by inference from the
general consequence of the merger of corporations under the Corporation Code, which
obviously does not deal with and, therefore, is silent on the terms and conditions of
employment in corporations or juridical entities.
This issue must be resolved NOW, instead of postponing it to a future time when the CBA is
renegotiated as suggested by the Honorable Justice Arturo D. Brion because the same issue
may still be resurrected in the renegotiation if the absorbed employees insist on their
privileged status of being exempt from any union shop clause or any variant thereof.
We find it significant to note that it is only the employer, Bank of the Philippine Islands (BPI),
that brought the case up to this Court via the instant petition for review; while the employees
actually involved in the case did not pursue the same relief, but had instead chosen in effect
to acquiesce to the decision of the Court of Appeals which effectively required them to comply
with the union shop clause under the existing CBA at the time of the merger of BPI with Far
East Bank and Trust Company (FEBTC), which decision had already become final and
executory as to the aforesaid employees. By not appealing the decision of the Court of
Appeals, the aforesaid employees are bound by the said Court of Appeals’ decision to join
BPI’s duly certified labor union. In view of the apparent acquiescence of the affected FEBTC
99
employees in the Court of Appeals’ decision, BPI should not have pursued this petition for
review. However, even assuming that BPI may do so, the same still cannot prosper.
What is before us now is a petition for review under Rule 45 of the Rules of Court of the
Decision2 dated September 30, 2003 of the Court of Appeals, as reiterated in its Resolution 3
of June 9, 2004, reversing and setting aside the Decision 4 dated November 23, 2001 of
Voluntary Arbitrator Rosalina Letrondo-Montejo, in CA-G.R. SP No. 70445, entitled BPI
Employees Union-Davao Chapter-Federation of Unions in BPI Unibank v. Bank of the Philippine
Islands, et al.
The antecedent facts are as follows:
On March 23, 2000, the Bangko Sentral ng Pilipinas approved the Articles of Merger executed
on January 20, 2000 by and between BPI, herein petitioner, and FEBTC. 5 This Article and Plan
of Merger was approved by the Securities and Exchange Commission on April 7, 2000.6
Pursuant to the Article and Plan of Merger, all the assets and liabilities of FEBTC were
transferred to and absorbed by BPI as the surviving corporation. FEBTC employees, including
those in its different branches across the country, were hired by petitioner as its own
employees, with their status and tenure recognized and salaries and benefits maintained.
Respondent BPI Employees Union-Davao Chapter - Federation of Unions in BPI Unibank
(hereinafter the "Union," for brevity) is the exclusive bargaining agent of BPI’s rank and file
employees in Davao City. The former FEBTC rank-and-file employees in Davao City did not
belong to any labor union at the time of the merger. Prior to the effectivity of the merger, or
on March 31, 2000, respondent Union invited said FEBTC employees to a meeting regarding
the Union Shop Clause (Article II, Section 2) of the existing CBA between petitioner BPI and
respondent Union.7
The parties both advert to certain provisions of the existing CBA, which are quoted below:
ARTICLE I
Section 1. Recognition and Bargaining Unit – The BANK recognizes the UNION as the sole and
exclusive collective bargaining representative of all the regular rank and file employees of the
Bank offices in Davao City.
Section 2. Exclusions
Section 3. Additional Exclusions
Section 4. Copy of Contract
ARTICLE II
Section 1. Maintenance of Membership – All employees within the bargaining unit who are
members of the Union on the date of the effectivity of this Agreement as well as employees
within the bargaining unit who subsequently join or become members of the Union during the
lifetime of this Agreement shall as a condition of their continued employment with the Bank,
maintain their membership in the Union in good standing.
Section 2. Union Shop - New employees falling within the bargaining unit as defined in
Article I of this Agreement, who may hereafter be regularly employed by the Bank shall,
within thirty (30) days after they become regular employees, join the Union as a condition of
their continued employment. It is understood that membership in good standing in the Union
is a condition of their continued employment with the Bank. 8 (Emphases supplied.)
After the meeting called by the Union, some of the former FEBTC employees joined the Union,
while others refused. Later, however, some of those who initially joined retracted their
membership.9
Respondent Union then sent notices to the former FEBTC employees who refused to join, as
well as those who retracted their membership, and called them to a hearing regarding the
matter. When these former FEBTC employees refused to attend the hearing, the president of
the Union requested BPI to implement the Union Shop Clause of the CBA and to terminate
their employment pursuant thereto.10
After two months of management inaction on the request, respondent Union informed
petitioner BPI of its decision to refer the issue of the implementation of the Union Shop Clause
of the CBA to the Grievance Committee. However, the issue remained unresolved at this level
and so it was subsequently submitted for voluntary arbitration by the parties.11
Voluntary Arbitrator Rosalina Letrondo-Montejo, in a Decision12 dated November 23, 2001,
ruled in favor of petitioner BPI’s interpretation that the former FEBTC employees were not
covered by the Union Security Clause of the CBA between the Union and the Bank on the
ground that the said employees were not new employees who were hired and subsequently
regularized, but were absorbed employees "by operation of law" because the "former
employees of FEBTC can be considered assets and liabilities of the absorbed
corporation." The Voluntary Arbitrator concluded that the former FEBTC employees could
not be compelled to join the Union, as it was their constitutional right to join or not to join
any organization.
Respondent Union filed a Motion for Reconsideration, but the Voluntary Arbitrator denied the
same in an Order dated March 25, 2002.13
Dissatisfied, respondent then appealed the Voluntary Arbitrator’s decision to the Court of
Appeals. In the herein assailed Decision dated September 30, 2003, the Court of Appeals
100
reversed and set aside the Decision of the Voluntary Arbitrator. 14 Likewise, the Court of
Appeals denied herein petitioner’s Motion for Reconsideration in a Resolution dated June 9,
2004.
The Court of Appeals pertinently ruled in its Decision:
A union-shop clause has been defined as a form of union security provision wherein non-
members may be hired, but to retain employment must become union members after a
certain period.
There is no question as to the existence of the union-shop clause in the CBA between the
petitioner-union and the company. The controversy lies in its application to the "absorbed"
employees.
This Court agrees with the voluntary arbitrator that the ABSORBED employees are distinct
and different from NEW employees BUT only in so far as their employment service is
concerned. The distinction ends there. In the case at bar, the absorbed employees’ length of
service from its former employer is tacked with their employment with BPI. Otherwise stated,
the absorbed employees service is continuous and there is no gap in their service record.
This Court is persuaded that the similarities of "new" and "absorbed" employees far outweighs
the distinction between them. The similarities lies on the following, to wit: (a) they have a
new employer; (b) new working conditions; (c) new terms of employment and; (d) new
company policy to follow. As such, they should be considered as "new" employees for
purposes of applying the provisions of the CBA regarding the "union-shop" clause.
To rule otherwise would definitely result to a very awkward and unfair situation wherein the
"absorbed" employees shall be in a different if not, better situation than the existing BPI
employees. The existing BPI employees by virtue of the "union-shop" clause are required to
pay the monthly union dues, remain as members in good standing of the union otherwise,
they shall be terminated from the company, and other union-related obligations. On the other
hand, the "absorbed" employees shall enjoy the "fruits of labor" of the petitioner-union and
its members for nothing in exchange. Certainly, this would disturb industrial peace in the
company which is the paramount reason for the existence of the CBA and the union.
The voluntary arbitrator’s interpretation of the provisions of the CBA concerning the coverage
of the "union-shop" clause is at war with the spirit and the rationale why the Labor Code itself
allows the existence of such provision.
The Supreme Court in the case of Manila Mandarin Employees Union vs. NLRC (G.R. No.
76989, September 29, 1987) rule, to quote:
"This Court has held that a valid form of union security, and such a provision in a collective
bargaining agreement is not a restriction of the right of freedom of association guaranteed by
the Constitution.
A closed-shop agreement is an agreement whereby an employer binds himself to hire only
members of the contracting union who must continue to remain members in good standing
to keep their jobs. It is "THE MOST PRIZED ACHIEVEMENT OF UNIONISM." IT ADDS
MEMBERSHIP AND COMPULSORY DUES. By holding out to loyal members a promise of
employment in the closed-shop, it wields group solidarity." (Emphasis supplied)
Hence, the voluntary arbitrator erred in construing the CBA literally at the expense of
industrial peace in the company.
With the foregoing ruling from this Court, necessarily, the alternative prayer of the petitioner
to require the individual respondents to become members or if they refuse, for this Court to
direct respondent BPI to dismiss them, follows.15
Hence, petitioner’s present recourse, raising the following issues:
I
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE
FORMER FEBTC EMPLOYEES SHOULD BE CONSIDERED ‘NEW’ EMPLOYEES OF BPI FOR
PURPOSES OF APPLYING THE UNION SHOP CLAUSE OF THE CBA
II
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE
VOLUNTARY ARBITRATOR’S INTERPRETATION OF THE COVERAGE OF THE UNION
SHOP CLAUSE IS "AT WAR WITH THE SPIRIT AND THE RATIONALE WHY THE LABOR
CODE ITSELF ALLOWS THE EXISTENCE OF SUCH PROVISION"16
In essence, the sole issue in this case is whether or not the former FEBTC employees that
were absorbed by petitioner upon the merger between FEBTC and BPI should be covered by
the Union Shop Clause found in the existing CBA between petitioner and respondent Union.
Petitioner is of the position that the former FEBTC employees are not new employees of BPI
for purposes of applying the Union Shop Clause of the CBA, on this note, petitioner points to
Section 2, Article II of the CBA, which provides:
New employees falling within the bargaining unit as defined in Article I of this Agreement,
who may hereafter be regularly employed by the Bank shall, within thirty (30) days after they
become regular employees, join the Union as a condition of their continued employment. It
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is understood that membership in good standing in the Union is a condition of their continued
employment with the Bank.17 (Emphases supplied.)
Petitioner argues that the term "new employees" in the Union Shop Clause of the CBA is
qualified by the phrases "who may hereafter be regularly employed" and "after they become
regular employees" which led petitioner to conclude that the "new employees" referred to in,
and contemplated by, the Union Shop Clause of the CBA were only those employees who were
"new" to BPI, on account of having been hired initially on a temporary or probationary status
for possible regular employment at some future date. BPI argues that the FEBTC employees
absorbed by BPI cannot be considered as "new employees" of BPI for purposes of applying
the Union Shop Clause of the CBA.18
According to petitioner, the contrary interpretation made by the Court of Appeals of this
particular CBA provision ignores, or even defies, what petitioner assumes as its clear meaning
and scope which allegedly contradicts the Court’s strict and restrictive enforcement of union
security agreements.
We do not agree.
Section 2, Article II of the CBA is silent as to how one becomes a "regular employee" of the
BPI for the first time. There is nothing in the said provision which requires that a "new" regular
employee first undergo a temporary or probationary status before being deemed as such
under the union shop clause of the CBA.
"Union security" is a generic term which is applied to and comprehends "closed shop," "union
shop," "maintenance of membership" or any other form of agreement which imposes upon
employees the obligation to acquire or retain union membership as a condition affecting
employment. There is union shop when all new regular employees are required to join the
union within a certain period for their continued employment. There is maintenance of
membership shop when employees, who are union members as of the effective date of the
agreement, or who thereafter become members, must maintain union membership as a
condition for continued employment until they are promoted or transferred out of the
bargaining unit or the agreement is terminated. A closed-shop, on the other hand, may be
defined as an enterprise in which, by agreement between the employer and his employees or
their representatives, no person may be employed in any or certain agreed departments of
the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains
a member in good standing of a union entirely comprised of or of which the employees in
interest are a part.19
In the case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc.,20 we ruled that:
It is the policy of the State to promote unionism to enable the workers to negotiate
with management on the same level and with more persuasiveness than if they were
to individually and independently bargain for the improvement of their respective
conditions. To this end, the Constitution guarantees to them the rights "to self-organization,
collective bargaining and negotiations and peaceful concerted actions including the right to
strike in accordance with law." There is no question that these purposes could be thwarted if
every worker were to choose to go his own separate way instead of joining his co-employees
in planning collective action and presenting a united front when they sit down to bargain with
their employers. It is for this reason that the law has sanctioned stipulations for the union
shop and the closed shop as a means of encouraging the workers to join and support the
labor union of their own choice as their representative in the negotiation of their demands
and the protection of their interest vis-à-vis the employer. (Emphasis ours.)
In other words, the purpose of a union shop or other union security arrangement is to
guarantee the continued existence of the union through enforced membership for the benefit
of the workers.
All employees in the bargaining unit covered by a Union Shop Clause in their CBA with
management are subject to its terms. However, under law and jurisprudence, the
following kinds of employees are exempted from its coverage, namely, employees who
at the time the union shop agreement takes effect are bona fide members of a religious
organization which prohibits its members from joining labor unions on religious grounds; 21
employees already in the service and already members of a union other than the
majority at the time the union shop agreement took effect;22 confidential employees
who are excluded from the rank and file bargaining unit; 23 and employees excluded from
the union shop by express terms of the agreement.
When certain employees are obliged to join a particular union as a requisite for continued
employment, as in the case of Union Security Clauses, this condition is a valid restriction of
the freedom or right not to join any labor organization because it is in favor of unionism. This
Court, on occasion, has even held that a union security clause in a CBA is not a restriction of
the right of freedom of association guaranteed by the Constitution. 24
Moreover, a closed shop agreement is an agreement whereby an employer binds himself to
hire only members of the contracting union who must continue to remain members in good
standing to keep their jobs. It is "the most prized achievement of unionism." It adds
membership and compulsory dues. By holding out to loyal members a promise of employment
in the closed shop, it wields group solidarity.25
Indeed, the situation of the former FEBTC employees in this case clearly does not fall within
the first three exceptions to the application of the Union Shop Clause discussed earlier. No
allegation or evidence of religious exemption or prior membership in another union or
engagement as a confidential employee was presented by both parties. The sole category
therefore in which petitioner may prove its claim is the fourth recognized exception or whether
the former FEBTC employees are excluded by the express terms of the existing CBA between
petitioner and respondent.
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To reiterate, petitioner insists that the term "new employees," as the same is used in the
Union Shop Clause of the CBA at issue, refers only to employees hired by BPI as non-regular
employees who later qualify for regular employment and become regular employees, and
not those who, as a legal consequence of a merger, are allegedly automatically deemed
regular employees of BPI. However, the CBA does not make a distinction as to how a regular
employee attains such a status. Moreover, there is nothing in the Corporation Law and the
merger agreement mandating the automatic employment as regular employees by the
surviving corporation in the merger.
It is apparent that petitioner hinges its argument that the former FEBTC employees were
absorbed by BPI merely as a legal consequence of a merger based on the characterization by
the Voluntary Arbiter of these absorbed employees as included in the "assets and liabilities"
of the dissolved corporation - assets because they help the Bank in its operation and liabilities
because redundant employees may be terminated and company benefits will be paid to them,
thus reducing the Bank’s financial status. Based on this ratiocination, she ruled that the same
are not new employees of BPI as contemplated by the CBA at issue, noting that the Certificate
of Filing of the Articles of Merger and Plan of Merger between FEBTC and BPI stated that "x x
x the entire assets and liabilities of FAR EASTERN BANK & TRUST COMPANY will be transferred
to and absorbed by the BANK OF THE PHILIPPINE ISLANDS x x x (underlining supplied)."26 In
sum, the Voluntary Arbiter upheld the reasoning of petitioner that the FEBTC employees
became BPI employees by "operation of law" because they are included in the term "assets
and liabilities."
Absorbed FEBTC Employees are Neither Assets nor Liabilities
In legal parlance, however, human beings are never embraced in the term "assets and
liabilities." Moreover, BPI’s absorption of former FEBTC employees was neither by operation
of law nor by legal consequence of contract. There was no government regulation or law that
compelled the merger of the two banks or the absorption of the employees of the dissolved
corporation by the surviving corporation. Had there been such law or regulation, the
absorption of employees of the non-surviving entities of the merger would have been
mandatory on the surviving corporation.27 In the present case, the merger was voluntarily
entered into by both banks presumably for some mutually acceptable consideration. In fact,
the Corporation Code does not also mandate the absorption of the employees of the non-
surviving corporation by the surviving corporation in the case of a merger. Section 80 of the
Corporation Code provides:
SEC. 80. Effects of merger or consolidation. – The merger or consolidation, as provided in the
preceding sections shall have the following effects:
1. The constituent corporations shall become a single corporation which, in case of
merger, shall be the surviving corporation designated in the plan of merger; and, in
case of consolidation, shall be the consolidated corporation designated in the plan of
consolidation;
2. The separate existence of the constituent corporations shall cease, except that of
the surviving or the consolidated corporation;
3. The surviving or the consolidated corporation shall possess all the rights, privileges,
immunities and powers and shall be subject to all the duties and liabilities of a
corporation organized under this Code;
4. The surviving or the consolidated corporation shall thereupon and thereafter possess
all the rights, privileges, immunities and franchises of each of the constituent
corporations; and all property, real or personal, and all receivables due on whatever
account, including subscriptions to shares and other choses in action, and all and every
other interest of, or belonging to, or due to each constituent corporation, shall be taken
and deemed to be transferred to and vested in such surviving or consolidated
corporation without further act or deed; and
5. The surviving or the consolidated corporation shall be responsible and liable for all
the liabilities and obligations of each of the constituent corporations in the same
manner as if such surviving or consolidated corporation had itself incurred such
liabilities or obligations; and any claim, action or proceeding pending by or against any
of such constituent corporations may be prosecuted by or against the surviving or
consolidated corporation, as the case may be. Neither the rights of creditors nor any
lien upon the property of any of such constituent corporations shall be impaired by
such merger or consolidated.
Significantly, too, the Articles of Merger and Plan of Merger dated April 7, 2000 did not contain
any specific stipulation with respect to the employment contracts of existing personnel of the
non-surviving entity which is FEBTC. Unlike the Voluntary Arbitrator, this Court cannot uphold
the reasoning that the general stipulation regarding transfer of FEBTC assets and liabilities to
BPI as set forth in the Articles of Merger necessarily includes the transfer of all FEBTC
employees into the employ of BPI and neither BPI nor the FEBTC employees allegedly could
do anything about it. Even if it is so, it does not follow that the absorbed employees
should not be subject to the terms and conditions of employment obtaining in the
surviving corporation.
The rule is that unless expressly assumed, labor contracts such as employment contracts and
collective bargaining agreements are not enforceable against a transferee of an enterprise,
labor contracts being in personam, thus binding only between the parties. A labor contract
merely creates an action in personam and does not create any real right which should be
respected by third parties. This conclusion draws its force from the right of an employer to
select his employees and to decide when to engage them as protected under our Constitution,
and the same can only be restricted by law through the exercise of the police power. 28
Furthermore, this Court believes that it is contrary to public policy to declare the former FEBTC
employees as forming part of the assets or liabilities of FEBTC that were transferred and
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absorbed by BPI in the Articles of Merger. Assets and liabilities, in this instance, should be
deemed to refer only to property rights and obligations of FEBTC and do not include the
employment contracts of its personnel. A corporation cannot unilaterally transfer its
employees to another employer like chattel. Certainly, if BPI as an employer had the right to
choose who to retain among FEBTC’s employees, FEBTC employees had the concomitant right
to choose not to be absorbed by BPI. Even though FEBTC employees had no choice or control
over the merger of their employer with BPI, they had a choice whether or not they would
allow themselves to be absorbed by BPI. Certainly nothing prevented the FEBTC’s employees
from resigning or retiring and seeking employment elsewhere instead of going along with the
proposed absorption.
Employment is a personal consensual contract and absorption by BPI of a former FEBTC
employee without the consent of the employee is in violation of an individual’s freedom to
contract. It would have been a different matter if there was an express provision in the articles
of merger that as a condition for the merger, BPI was being required to assume all the
employment contracts of all existing FEBTC employees with the conformity of the employees.
In the absence of such a provision in the articles of merger, then BPI clearly had the business
management decision as to whether or not employ FEBTC’s employees. FEBTC employees
likewise retained the prerogative to allow themselves to be absorbed or not; otherwise, that
would be tantamount to involuntary servitude.
There appears to be no dispute that with respect to FEBTC employees that BPI chose not to
employ or FEBTC employees who chose to retire or be separated from employment instead
of "being absorbed," BPI’s assumed liability to these employees pursuant to the merger is
FEBTC’s liability to them in terms of separation pay,29 retirement pay30 or other benefits that
may be due them depending on the circumstances.
Legal Consequences of Mergers
Although not binding on this Court, American jurisprudence on the consequences of voluntary
mergers on the right to employment and seniority rights is persuasive and illuminating. We
quote the following pertinent discussion from the American Law Reports:
Several cases have involved the situation where as a result of mergers, consolidations, or
shutdowns, one group of employees, who had accumulated seniority at one plant or for one
employer, finds that their jobs have been discontinued except to the extent that they are
offered employment at the place or by the employer where the work is to be carried on in the
future. Such cases have involved the question whether such transferring employees should
be entitled to carry with them their accumulated seniority or whether they are to be compelled
to start over at the bottom of the seniority list in the "new" job. It has been recognized in
some cases that the accumulated seniority does not survive and cannot be transferred to the
"new" job.
In Carver v Brien (1942) 315 Ill App 643, 43 NE2d 597, the shop work of three formerly
separate railroad corporations, which had previously operated separate facilities, was
consolidated in the shops of one of the roads. Displaced employees of the other two roads
were given preference for the new jobs created in the shops of the railroad which took over
the work. A controversy arose between the employees as to whether the displaced employees
were entitled to carry with them to the new jobs the seniority rights they had accumulated
with their prior employers, that is, whether the rosters of the three corporations, for seniority
purposes, should be "dovetailed" or whether the transferring employees should go to the
bottom of the roster of their new employer. Labor representatives of the various systems
involved attempted to work out an agreement which, in effect, preserved the seniority status
obtained in the prior employment on other roads, and the action was for specific performance
of this agreement against a demurring group of the original employees of the railroad which
was operating the consolidated shops. The relief sought was denied, the court saying that,
absent some specific contract provision otherwise, seniority rights were ordinarily limited to
the employment in which they were earned, and concluding that the contract for which specific
performance was sought was not such a completed and binding agreement as would support
such equitable relief, since the railroad, whose concurrence in the arrangements made was
essential to their effectuation, was not a party to the agreement.
Where the provisions of a labor contract provided that in the event that a trucker absorbed
the business of another private contractor or common carrier, or was a party to a merger of
lines, the seniority of the employees absorbed or affected thereby should be determined by
mutual agreement between the trucker and the unions involved, it was held in Moore v
International Brotherhood of Teamsters, etc. (1962, Ky) 356 SW2d 241, that the trucker was
not required to absorb the affected employees as well as the business, the court saying that
they could find no such meaning in the above clause, stating that it dealt only with seniority,
and not with initial employment. Unless and until the absorbing company agreed to take the
employees of the company whose business was being absorbed, no seniority problem was
created, said the court, hence the provision of the contract could have no application.
Furthermore, said the court, it did not require that the absorbing company take these
employees, but only that if it did take them the question of seniority between the old and
new employees would be worked out by agreement or else be submitted to the grievance
procedure.31 (Emphasis ours.)
Indeed, from the tenor of local and foreign authorities, in voluntary mergers, absorption of
the dissolved corporation’s employees or the recognition of the absorbed employees’ service
with their previous employer may be demanded from the surviving corporation if required by
provision of law or contract. The dissent of Justice Arturo D. Brion tries to make a distinction
as to the terms and conditions of employment of the absorbed employees in the case of a
corporate merger or consolidation which will, in effect, take away from corporate management
the prerogative to make purely business decisions on the hiring of employees or will give it
an excuse not to apply the CBA in force to the prejudice of its own employees and their
recognized collective bargaining agent. In this regard, we disagree with Justice Brion.
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Justice Brion takes the position that because the surviving corporation continues the
personality of the dissolved corporation and acquires all the latter’s rights and obligations, it
is duty-bound to absorb the dissolved corporation’s employees, even in the absence of a
stipulation in the plan of merger. He proposes that this interpretation would provide the
necessary protection to labor as it spares workers from being "left in legal limbo."
However, there are instances where an employer can validly discontinue or terminate the
employment of an employee without violating his right to security of tenure. Among others,
in case of redundancy, for example, superfluous employees may be terminated and such
termination would be authorized under Article 283 of the Labor Code. 32
Moreover, assuming for the sake of argument that there is an obligation to hire or absorb all
employees of the non-surviving corporation, there is still no basis to conclude that the terms
and conditions of employment under a valid collective bargaining agreement in force in the
surviving corporation should not be made to apply to the absorbed employees.
The Corporation Code and the Subject Merger Agreement are Silent on Efficacy, Terms and
Conditions of Employment Contracts
The lack of a provision in the plan of merger regarding the transfer of employment contracts
to the surviving corporation could have very well been deliberate on the part of the parties to
the merger, in order to grant the surviving corporation the freedom to choose who among the
dissolved corporation’s employees to retain, in accordance with the surviving corporation’s
business needs. If terminations, for instance due to redundancy or labor-saving devices or to
prevent losses, are done in good faith, they would be valid. The surviving corporation too is
duty-bound to protect the rights of its own employees who may be affected by the merger in
terms of seniority and other conditions of their employment due to the merger. Thus, we are
not convinced that in the absence of a stipulation in the merger plan the surviving corporation
was compelled, or may be judicially compelled, to absorb all employees under the same terms
and conditions obtaining in the dissolved corporation as the surviving corporation should also
take into consideration the state of its business and its obligations to its own employees, and
to their certified collective bargaining agent or labor union.
Even assuming we accept Justice Brion’s theory that in a merger situation the surviving
corporation should be compelled to absorb the dissolved corporation’s employees as a legal
consequence of the merger and as a social justice consideration, it bears to emphasize his
dissent also recognizes that the employee may choose to end his employment at any time by
voluntarily resigning. For the employee to be "absorbed" by BPI, it requires the employees’
implied or express consent. It is because of this human element in employment contracts and
the personal, consensual nature thereof that we cannot agree that, in a merger situation,
employment contracts are automatically transferable from one entity to another in the same
manner that a contract pertaining to purely proprietary rights – such as a promissory note or
a deed of sale of property – is perfectly and automatically transferable to the surviving
corporation.
That BPI is the same entity as FEBTC after the merger is but a legal fiction intended as a tool
to adjudicate rights and obligations between and among the merged corporations and the
persons that deal with them. Although in a merger it is as if there is no change in the
personality of the employer, there is in reality a change in the situation of the employee. Once
an FEBTC employee is absorbed, there are presumably changes in his condition of
employment even if his previous tenure and salary rate is recognized by BPI. It is reasonable
to assume that BPI would have different rules and regulations and company practices than
FEBTC and it is incumbent upon the former FEBTC employees to obey these new rules and
adapt to their new environment. Not the least of the changes in employment condition that
the absorbed FEBTC employees must face is the fact that prior to the merger they were
employees of an unorganized establishment and after the merger they became employees of
a unionized company that had an existing collective bargaining agreement with the certified
union. This presupposes that the union who is party to the collective bargaining agreement is
the certified union that has, in the appropriate certification election, been shown to represent
a majority of the members of the bargaining unit.
Likewise, with respect to FEBTC employees that BPI chose to employ and who also chose to
be absorbed, then due to BPI’s blanket assumption of liabilities and obligations under the
articles of merger, BPI was bound to respect the years of service of these FEBTC employees
and to pay the same, or commensurate salaries and other benefits that these employees
previously enjoyed with FEBTC.
As the Union likewise pointed out in its pleadings, there were benefits under the CBA that
the former FEBTC employees did not enjoy with their previous employer. As BPI
employees, they will enjoy all these CBA benefits upon their "absorption." Thus, although in
a sense BPI is continuing FEBTC’s employment of these absorbed employees, BPI’s
employment of these absorbed employees was not under exactly the same terms and
conditions as stated in the latter’s employment contracts with FEBTC. This further strengthens
the view that BPI and the former FEBTC employees voluntarily contracted with each other for
their employment in the surviving corporation.
Proper Appreciation of the Term "New Employees" Under the CBA
In any event, it is of no moment that the former FEBTC employees retained the regular status
that they possessed while working for their former employer upon their absorption by
petitioner. This fact would not remove them from the scope of the phrase "new employees"
as contemplated in the Union Shop Clause of the CBA, contrary to petitioner’s insistence that
the term "new employees" only refers to those who are initially hired as non-regular
employees for possible regular employment.
The Union Shop Clause in the CBA simply states that "new employees" who during the
effectivity of the CBA "may be regularly employed" by the Bank must join the union within
thirty (30) days from their regularization. There is nothing in the said clause that limits its
application to only new employees who possess non-regular status, meaning probationary
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status, at the start of their employment. Petitioner likewise failed to point to any provision in
the CBA expressly excluding from the Union Shop Clause new employees who are "absorbed"
as regular employees from the beginning of their employment. What is indubitable from the
Union Shop Clause is that upon the effectivity of the CBA, petitioner’s new regular employees
(regardless of the manner by which they became employees of BPI) are required to join the
Union as a condition of their continued employment.
The dissenting opinion of Justice Brion dovetails with Justice Carpio’s view only in their
restrictive interpretation of who are "new employees" under the CBA. To our dissenting
colleagues, the phrase "new employees" (who are covered by the union shop clause) should
only include new employees who were hired as probationary during the life of the CBA and
were later granted regular status. They propose that the former FEBTC employees who were
deemed regular employees from the beginning of their employment with BPI should be treated
as a special class of employees and be excluded from the union shop clause.
Justice Brion himself points out that there is no clear, categorical definition of "new employee"
in the CBA. In other words, the term "new employee" as used in the union shop clause is used
broadly without any qualification or distinction. However, the Court should not uphold an
interpretation of the term "new employee" based on the general and extraneous provisions
of the Corporation Code on merger that would defeat, rather than fulfill, the purpose of the
union shop clause. To reiterate, the provision of the Article 248(e) of the Labor Code in point
mandates that nothing in the said Code or any other law should stop the parties from requiring
membership in a recognized collective bargaining agent as a condition of employment.
Significantly, petitioner BPI never stretches its arguments so far as to state that the absorbed
employees should be deemed "old employees" who are not covered by the Union Shop Clause.
This is not surprising.
By law and jurisprudence, a merger only becomes effective upon approval by the Securities
and Exchange Commission (SEC) of the articles of merger. In Associated Bank v. Court of
Appeals,33 we held:
The procedure to be followed is prescribed under the Corporation Code. Section 79 of said
Code requires the approval by the Securities and Exchange Commission (SEC) of the articles
of merger which, in turn, must have been duly approved by a majority of the respective
stockholders of the constituent corporations. The same provision further states that the
merger shall be effective only upon the issuance by the SEC of a certificate of merger. The
effectivity date of the merger is crucial for determining when the merged or absorbed
corporation ceases to exist; and when its rights, privileges, properties as well as liabilities
pass on to the surviving corporation. (Emphasis ours.)
In other words, even though BPI steps into the shoes of FEBTC as the surviving corporation,
BPI does so at a particular point in time, i.e., the effectivity of the merger upon the SEC’s
issuance of a certificate of merger. In fact, the articles of merger themselves provided that
both BPI and FEBTC will continue their respective business operations until the SEC issues the
certificate of merger and in the event SEC does not issue such a certificate, they agree to
hold each other blameless for the non-consummation of the merger.
Considering the foregoing principle, BPI could have only become the employer of the FEBTC
employees it absorbed after the approval by the SEC of the merger. If the SEC did not approve
the merger, BPI would not be in the position to absorb the employees of FEBTC at all. Indeed,
there is evidence on record that BPI made the assignments of its absorbed employees in BPI
effective April 10, 2000, or after the SEC’s approval of the merger. 34 In other words, BPI
became the employer of the absorbed employees only at some point after the effectivity
of the merger, notwithstanding the fact that the absorbed employees’ years of service with
FEBTC were voluntarily recognized by BPI.
Even assuming for the sake of argument that we consider the absorbed FEBTC employees as
"old employees" of BPI who are not members of any union (i.e., it is their date of hiring by
FEBTC and not the date of their absorption that is considered), this does not necessarily
exclude them from the union security clause in the CBA. The CBA subject of this case was
effective from April 1, 1996 until March 31, 2001. Based on the allegations of the former
FEBTC employees themselves, there were former FEBTC employees who were hired by
FEBTC after April 1, 1996 and if their date of hiring by FEBTC is considered as their date of
hiring by BPI, they would undeniably be considered "new employees" of BPI within the
contemplation of the Union Shop Clause of the said CBA. Otherwise, it would lead to the
absurd situation that we would discriminate not only between new BPI employees (hired
during the life of the CBA) and former FEBTC employees (absorbed during the life of the CBA)
but also among the former FEBTC employees themselves. In other words, we would be
treating employees who are exactly similarly situated (i.e., the group of absorbed FEBTC
employees) differently. This hardly satisfies the demands of equality and justice.
Petitioner limited itself to the argument that its absorbed employees do not fall within the
term "new employees" contemplated under the Union Shop Clause with the apparent objective
of excluding all, and not just some, of the former FEBTC employees from the application of
the Union Shop Clause.
However, in law or even under the express terms of the CBA, there is no special class of
employees called "absorbed employees." In order for the Court to apply or not apply the Union
Shop Clause, we can only classify the former FEBTC employees as either "old" or "new." If
they are not "old" employees, they are necessarily "new" employees. If they are new
employees, the Union Shop Clause did not distinguish between new employees who are non-
regular at their hiring but who subsequently become regular and new employees who are
"absorbed" as regular and permanent from the beginning of their employment. The Union
Shop Clause did not so distinguish, and so neither must we.
No Substantial Distinction Under the CBA Between Regular Employees Hired After
Probationary Status and Regular Employees Hired After the Merger
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Verily, we agree with the Court of Appeals that there are no substantial differences between
a newly hired non-regular employee who was regularized weeks or months after his hiring
and a new employee who was absorbed from another bank as a regular employee pursuant
to a merger, for purposes of applying the Union Shop Clause. Both employees were
hired/employed only after the CBA was signed. At the time they are being required to join the
Union, they are both already regular rank and file employees of BPI. They belong to the same
bargaining unit being represented by the Union. They both enjoy benefits that the Union was
able to secure for them under the CBA. When they both entered the employ of BPI, the CBA
and the Union Shop Clause therein were already in effect and neither of them had the
opportunity to express their preference for unionism or not. We see no cogent reason why
the Union Shop Clause should not be applied equally to these two types of new employees,
for they are undeniably similarly situated.
The effect or consequence of BPI’s so-called "absorption" of former FEBTC employees should
be limited to what they actually agreed to, i.e. recognition of the FEBTC employees’ years of
service, salary rate and other benefits with their previous employer. The effect should not be
stretched so far as to exempt former FEBTC employees from the existing CBA terms, company
policies and rules which apply to employees similarly situated. If the Union Shop Clause is
valid as to other new regular BPI employees, there is no reason why the same clause would
be a violation of the "absorbed" employees’ freedom of association.
Non-Application of Union Shop Clause Contrary to the Policy of the Labor Code and
Inimical to Industrial Peace
It is but fair that similarly situated employees who enjoy the same privileges of a CBA should
be likewise subject to the same obligations the CBA imposes upon them. A contrary
interpretation of the Union Shop Clause will be inimical to industrial peace and workers’
solidarity. This unfavorable situation will not be sufficiently addressed by asking the former
FEBTC employees to simply pay agency fees to the Union in lieu of union membership, as the
dissent of Justice Carpio suggests. The fact remains that other new regular employees, to
whom the "absorbed employees" should be compared, do not have the option to simply pay
the agency fees and they must join the Union or face termination.
Petitioner’s restrictive reading of the Union Shop Clause could also inadvertently open an
avenue, which an employer could readily use, in order to dilute the membership base of the
certified union in the collective bargaining unit (CBU). By entering into a voluntary merger
with a non-unionized company that employs more workers, an employer could get rid of its
existing union by the simple expedient of arguing that the "absorbed employees" are not new
employees, as are commonly understood to be covered by a CBA’s union security clause. This
could then lead to a new majority within the CBU that could potentially threaten the majority
status of the existing union and, ultimately, spell its demise as the CBU’s bargaining
representative. Such a dreaded but not entirely far-fetched scenario is no different from the
ingenious and creative "union-busting" schemes that corporations have fomented throughout
the years, which this Court has foiled time and again in order to preserve and protect the
valued place of labor in this jurisdiction consistent with the Constitution’s mandate of insuring
social justice.
There is nothing in the Labor Code and other applicable laws or the CBA provision at issue
that requires that a new employee has to be of probationary or non-regular status at the
beginning of the employment relationship. An employer may confer upon a new employee the
status of regular employment even at the onset of his engagement. Moreover, no law prohibits
an employer from voluntarily recognizing the length of service of a new employee with a
previous employer in relation to computation of benefits or seniority but it should not unduly
be interpreted to exclude them from the coverage of the CBA which is a binding contractual
obligation of the employer and employees.
Indeed, a union security clause in a CBA should be interpreted to give meaning and effect to
its purpose, which is to afford protection to the certified bargaining agent and ensure that the
employer is dealing with a union that represents the interests of the legally mandated
percentage of the members of the bargaining unit.
The union shop clause offers protection to the certified bargaining agent by ensuring that
future regular employees who (a) enter the employ of the company during the life of the CBA;
(b) are deemed part of the collective bargaining unit; and (c) whose number will affect the
number of members of the collective bargaining unit will be compelled to join the union. Such
compulsion has legal effect, precisely because the employer by voluntarily entering in to a
union shop clause in a CBA with the certified bargaining agent takes on the responsibility of
dismissing the new regular employee who does not join the union.
Without the union shop clause or with the restrictive interpretation thereof as proposed in the
dissenting opinions, the company can jeopardize the majority status of the certified union by
excluding from union membership all new regular employees whom the Company will
"absorb" in future mergers and all new regular employees whom the Company hires as regular
from the beginning of their employment without undergoing a probationary period. In this
manner, the Company can increase the number of members of the collective bargaining unit
and if this increase is not accompanied by a corresponding increase in union membership, the
certified union may lose its majority status and render it vulnerable to attack by another union
who wishes to represent the same bargaining unit.35
Or worse, a certified union whose membership falls below twenty percent (20%) of the total
members of the collective bargaining unit may lose its status as a legitimate labor organization
altogether, even in a situation where there is no competing union. 36 In such a case, an
interested party may file for the cancellation of the union’s certificate of registration with the
Bureau of Labor Relations.37
Plainly, the restrictive interpretation of the union shop clause would place the certified union’s
very existence at the mercy and control of the employer. Relevantly, only BPI, the
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employer appears to be interested in pursuing this case. The former FEBTC employees
have not joined BPI in this appeal.
For the foregoing reasons, Justice Carpio’s proposal to simply require the former FEBTC to
pay agency fees is wholly inadequate to compensate the certified union for the loss of
additional membership supposedly guaranteed by compliance with the union shop clause. This
is apart from the fact that treating these "absorbed employees" as a special class of new
employees does not encourage worker solidarity in the company since another class of new
employees (i.e. those whose were hired as probationary and later regularized during the life
of the CBA) would not have the option of substituting union membership with payment of
agency fees.
Justice Brion, on the other hand, appears to recognize the inherent unfairness of perpetually
excluding the "absorbed" employees from the ambit of the union shop clause. He proposes
that this matter be left to negotiation by the parties in the next CBA. To our mind, however,
this proposal does not sufficiently address the issue. With BPI already taking the position that
employees "absorbed" pursuant to its voluntary mergers with other banks are exempt from
the union shop clause, the chances of the said bank ever agreeing to the inclusion of such
employees in a future CBA is next to nil – more so, if BPI’s narrow interpretation of the union
shop clause is sustained by this Court.
Right of an Employee not to Join a Union is not Absolute and Must Give Way to the Collective
Good of All Members of the Bargaining Unit
The dissenting opinions place a premium on the fact that even if the former FEBTC employees
are not old employees, they nonetheless were employed as regular and permanent employees
without a gap in their service. However, an employee’s permanent and regular employment
status in itself does not necessarily exempt him from the coverage of a union shop clause.
In the past this Court has upheld even the more stringent type of union security clause, i.e.,
the closed shop provision, and held that it can be made applicable to old employees who are
already regular and permanent but have chosen not to join a union. In the early case of Juat
v. Court of Industrial Relations,38 the Court held that an old employee who had no union may
be compelled to join the union even if the collective bargaining agreement (CBA) imposing
the closed shop provision was only entered into seven years after of the hiring of the said
employee. To quote from that decision:
A closed-shop agreement has been considered as one form of union security whereby only
union members can be hired and workers must remain union members as a condition of
continued employment. The requirement for employees or workers to become members of a
union as a condition for employment redounds to the benefit and advantage of said employees
because by holding out to loyal members a promise of employment in the closed-shop the
union wields group solidarity. In fact, it is said that "the closed-shop contract is the most
prized achievement of unionism."
xxxx
This Court had categorically held in the case of Freeman Shirt Manufacturing Co., Inc., et al.
vs. Court of Industrial Relations, et al., G.R. No. L-16561, Jan. 28, 1961, that the closed-shop
proviso of a collective bargaining agreement entered into between an employer and a duly
authorized labor union is applicable not only to the employees or laborers that are employed
after the collective bargaining agreement had been entered into but also to old employees
who are not members of any labor union at the time the said collective bargaining agreement
was entered into. In other words, if an employee or laborer is already a member of a labor
union different from the union that entered into a collective bargaining agreement with the
employer providing for a closed-shop, said employee or worker cannot be obliged to become
a member of that union which had entered into a collective bargaining agreement with the
employer as a condition for his continued employment. (Emphasis and underscoring
supplied.)
Although the present case does not involve a closed shop provision that included even old
employees, the Juat example is but one of the cases that laid down the doctrine that the right
not to join a union is not absolute. Theoretically, there is nothing in law or jurisprudence to
prevent an employer and a union from stipulating that existing employees (who already
attained regular and permanent status but who are not members of any union) are to be
included in the coverage of a union security clause. Even Article 248(e) of the Labor Code
only expressly exempts old employees who already have a union from inclusion in a union
security clause.39
Contrary to the assertion in the dissent of Justice Carpio, Juat has not been overturned by
Victoriano v. Elizalde Rope Workers’ Union40 nor by Reyes v. Trajano.41 The factual milieus of
these three cases are vastly different.
In Victoriano, the issue that confronted the Court was whether or not employees who were
members of the Iglesia ni Kristo (INK) sect could be compelled to join the union under a
closed shop provision, despite the fact that their religious beliefs prohibited them from joining
a union. In that case, the Court was asked to balance the constitutional right to religious
freedom against a host of other constitutional provisions including the freedom of association,
the non-establishment clause, the non-impairment of contracts clause, the equal protection
clause, and the social justice provision. In the end, the Court held that "religious freedom,
although not unlimited, is a fundamental personal right and liberty, and has a preferred
position in the hierarchy of values."42
However, Victoriano is consistent with Juat since they both affirm that the right to refrain
from joining a union is not absolute. The relevant portion of Victoriano is quoted below:
The right to refrain from joining labor organizations recognized by Section 3 of the Industrial
Peace Act is, however, limited. The legal protection granted to such right to refrain from
joining is withdrawn by operation of law, where a labor union and an employer have agreed
108
on a closed shop, by virtue of which the employer may employ only member of the collective
bargaining union, and the employees must continue to be members of the union for the
duration of the contract in order to keep their jobs. Thus Section 4 (a) (4) of the Industrial
Peace Act, before its amendment by Republic Act No. 3350, provides that although it would
be an unfair labor practice for an employer "to discriminate in regard to hire or tenure of
employment or any term or condition of employment to encourage or discourage membership
in any labor organization" the employer is, however, not precluded "from making an
agreement with a labor organization to require as a condition of employment membership
therein, if such labor organization is the representative of the employees." By virtue,
therefore, of a closed shop agreement, before the enactment of Republic Act No. 3350, if any
person, regardless of his religious beliefs, wishes to be employed or to keep his employment,
he must become a member of the collective bargaining union. Hence, the right of said
employee not to join the labor union is curtailed and withdrawn.43 (Emphases supplied.)
If Juat exemplified an exception to the rule that a person has the right not to join a union,
Victoriano merely created an exception to the exception on the ground of religious freedom.
Reyes, on the other hand, did not involve the interpretation of any union security clause. In
that case, there was no certified bargaining agent yet since the controversy arose during a
certification election. In Reyes, the Court highlighted the idea that the freedom of association
included the right not to associate or join a union in resolving the issue whether or not the
votes of members of the INK sect who were part of the bargaining unit could be excluded in
the results of a certification election, simply because they were not members of the two
contesting unions and were expected to have voted for "NO UNION" in view of their religious
affiliation. The Court upheld the inclusion of the votes of the INK members since in the
previous case of Victoriano we held that INK members may not be compelled to join a union
on the ground of religious freedom and even without Victoriano every employee has the right
to vote "no union" in a certification election as part of his freedom of association. However,
Reyes is not authority for Justice Carpio’s proposition that an employee who is not a member
of any union may claim an exemption from an existing union security clause because he
already has regular and permanent status but simply prefers not to join a union.
The other cases cited in Justice Carpio’s dissent on this point are likewise inapplicable. Basa
v. Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas, 44
Anucension v. National Labor Union,45 and Gonzales v. Central Azucarera de Tarlac Labor
Union46 all involved members of the INK. In line with Victoriano, these cases upheld the INK
members’ claimed exemption from the union security clause on religious grounds. In the
present case, the former FEBTC employees never claimed any religious grounds for their
exemption from the Union Shop Clause. As for Philips Industrial Development, Inc. v. National
Labor Relations Corporation47 and Knitjoy Manufacturing, Inc. v. Ferrer-Calleja,48 the
employees who were exempted from joining the respondent union or who were excluded from
participating in the certification election were found to be not members of the bargaining unit
represented by respondent union and were free to form/join their own union. In the case at
bar, it is undisputed that the former FEBTC employees were part of the bargaining unit that
the Union represented. Thus, the rulings in Philips and Knitjoy have no relevance to the issues
at hand.
Time and again, this Court has ruled that the individual employee’s right not to join a union
may be validly restricted by a union security clause in a CBA 49 and such union security clause
is not a violation of the employee’s constitutional right to freedom of association. 50
It is unsurprising that significant provisions on labor protection of the 1987 Constitution are
found in Article XIII on Social Justice. The constitutional guarantee given the right to form
unions51 and the State policy to promote unionism52 have social justice considerations. In
People’s Industrial and Commercial Employees and Workers Organization v. People’s
Industrial and Commercial Corporation,53 we recognized that "[l]abor, being the weaker in
economic power and resources than capital, deserve protection that is actually substantial
and material."
The rationale for upholding the validity of union shop clauses in a CBA, even if they impinge
upon the individual employee’s right or freedom of association, is not to protect the union for
the union’s sake. Laws and jurisprudence promote unionism and afford certain protections to
the certified bargaining agent in a unionized company because a strong and effective union
presumably benefits all employees in the bargaining unit since such a union would be in a
better position to demand improved benefits and conditions of work from the employer. This
is the rationale behind the State policy to promote unionism declared in the Constitution,
which was elucidated in the above-cited case of Liberty Flour Mills Employees v. Liberty Flour
Mills, Inc.54
In the case at bar, since the former FEBTC employees are deemed covered by the Union Shop
Clause, they are required to join the certified bargaining agent, which supposedly has
gathered the support of the majority of workers within the bargaining unit in the appropriate
certification proceeding. Their joining the certified union would, in fact, be in the best interests
of the former FEBTC employees for it unites their interests with the majority of employees in
the bargaining unit. It encourages employee solidarity and affords sufficient protection to the
majority status of the union during the life of the CBA which are the precisely the objectives
of union security clauses, such as the Union Shop Clause involved herein. We are indeed not
being called to balance the interests of individual employees as against the State policy of
promoting unionism, since the employees, who were parties in the court below, no longer
contested the adverse Court of Appeals’ decision. Nonetheless, settled jurisprudence has
already swung the balance in favor of unionism, in recognition that ultimately the individual
employee will be benefited by that policy. In the hierarchy of constitutional values, this Court
has repeatedly held that the right to abstain from joining a labor organization is subordinate
to the policy of encouraging unionism as an instrument of social justice.
Also in the dissenting opinion of Justice Carpio, he maintains that one of the dire consequences
to the former FEBTC employees who refuse to join the union is the forfeiture of their
retirement benefits. This is clearly not the case precisely because BPI expressly recognized
109
under the merger the length of service of the absorbed employees with FEBTC. Should some
refuse to become members of the union, they may still opt to retire if they are qualified under
the law, the applicable retirement plan, or the CBA, based on their combined length of service
with FEBTC and BPI. Certainly, there is nothing in the union shop clause that should be read
as to curtail an employee’s eligibility to apply for retirement if qualified under the law, the
existing retirement plan, or the CBA as the case may be.
In sum, this Court finds it reasonable and just to conclude that the Union Shop Clause of the
CBA covers the former FEBTC employees who were hired/employed by BPI during the
effectivity of the CBA in a manner which petitioner describes as "absorption." A contrary
appreciation of the facts of this case would, undoubtedly, lead to an inequitable and very
volatile labor situation which this Court has consistently ruled against.1avvphi1
In the case of former FEBTC employees who initially joined the union but later withdrew their
membership, there is even greater reason for the union to request their dismissal from the
employer since the CBA also contained a Maintenance of Membership Clause.
A final point in relation to procedural due process, the Court is not unmindful that the former
FEBTC employees’ refusal to join the union and BPI’s refusal to enforce the Union Shop Clause
in this instance may have been based on the honest belief that the former FEBTC employees
were not covered by said clause. In the interest of fairness, we believe the former FEBTC
employees should be given a fresh thirty (30) days from notice of finality of this decision to
join the union before the union demands BPI to terminate their employment under the Union
Shop Clause, assuming said clause has been carried over in the present CBA and there has
been no material change in the situation of the parties.
WHEREFORE, the petition is hereby DENIED, and the Decision dated September 30, 2003
of the Court of Appeals is AFFIRMED, subject to the thirty (30) day notice requirement
imposed herein. Former FEBTC employees who opt not to become union members but who
qualify for retirement shall receive their retirement benefits in accordance with law, the
applicable retirement plan, or the CBA, as the case may be.
SO ORDERED.
G.R. No. 172302 February 18, 2014
PRYCE CORPORATION, Petitioner,
vs.
CHINA BANKING CORPORATION, Respondent.
RESOLUTION
LEONEN, J.:
This case resolves conflicting decisions between two divisions. Only one may serve as res
judicata or a bar for the other to proceed. This case also settles the doctrine as to whether a
hearing is needed prior to the issuance of a stay order in corporate rehabilitation proceedings.
The present case originated from a petition for corporate rehabilitation filed by petitioner
Pryce Corporation on July 9, 2004 with the Regional Trial Court of Makati, Branch 138.1
The rehabilitation court found the petition sufficient in form and substance and issued a stay
order on July 13, 2004 appointing Gener T. Mendoza as rehabilitation receiver.2
On September 13, 2004, the rehabilitation court gave due course to the petition and directed
the rehabilitation receiver to evaluate and give recommendations on petitioner Pryce
Corporation’s proposed rehabilitation plan attached to its petition.3
The rehabilitation receiver did not approve this plan and submitted instead an amended
rehabilitation plan, which the rehabilitation court approved by order dated January 17, 2005.4
In its disposition, the court found petitioner Pryce Corporation "eligible to be placed in a state
of corporate rehabilitation."5 The disposition likewise identified the assets to be held and
disposed of by petitioner Pryce Corporation and the manner by which its liabilities shall be
paid and liquidated.6
On February 23, 2005, respondent China Banking Corporation elevated the case to the Court
of Appeals. Its petition questioned the January 17, 2005 order that included the following
terms:
1. The indebtedness to China Banking Corporation and Bank of the Philippine Islands
as well as the long term commercial papers will be paid through a dacion en pago of
developed real estate assets of the petitioner.
xxxx
4. All accrued penalties are waived[.]
5. Interests shall accrue only up to July 13, 2004, the date of issuance of the stay
order[.]
6. No interest will accrue during the pendency of petitioner’s corporate rehabilitation[.]
7. Dollar-denominated loans will be converted to Philippine Pesos on the date of the
issuance of this Order using the reference rate of the Philippine Dealing System as of
this date.7
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Respondent China Banking Corporation contended that the rehabilitation plan’s approval
impaired the obligations of contracts. It argued that neither the provisions of Presidential
Decree No. 902-A nor the Interim Rules of Procedure on Corporate Rehabilitation (Interim
Rules) empowered commercial courts "to render without force and effect valid contractual
stipulations."8 Moreover, the plan’s approval authorizing dacion en pago of petitioner Pryce
Corporation’s properties without respondent China Banking Corporation’s consent not only
violated "mutuality of contract and due process, but [was] also antithetical to the avowed
policies of the state to maintain a competitive financial system."9
The Bank of the Philippine Islands (BPI), another creditor of petitioner Pryce Corporation, filed
a separate petition with the Court of Appeals assailing the same order by the rehabilitation
court. BPI called the attention of the court "to the non-impairment clause and the mutuality
of contracts purportedly ran roughshod by the [approved rehabilitation plan]."10
On July 28, 2005, the Court of Appeals Seventh (7th) Division11 granted respondent China
Banking Corporation's petition, and reversed and set aside the rehabilitation court’s: (1) July
13, 2004 stay order that also appointed Gener T. Mendoza as rehabilitation receiver; (2)
September 13, 2004 order giving due course to the petition and directing the rehabilitation
receiver to evaluate and give recommendations on petitioner Pryce Corporation’s proposed
rehabilitation plan; and (3) January 17, 2005 order finding petitioner Pryce Corporation
eligible to be placed in a state of corporate rehabilitation, identifying assets to be disposed of,
and determining the manner of liquidation to pay the liabilities.12
With respect to BPI’s separate appeal, the Court of Appeals First (1st) Division13 granted its
petition initially and set aside the January 17, 2005 order of the rehabilitation court in its
decision dated May 3, 2006.14 On reconsideration, the court issued a resolution dated May
23, 2007 setting aside its original decision and dismissing the petition.15 BPI elevated the
case to this court, docketed as G.R. No. 180316. By resolution dated January 30, 2008, the
First (1st) Division of this court denied the petition.16 By resolution dated April 28, 2008, this
court denied reconsideration with finality.17
Meanwhile, petitioner Pryce Corporation also appealed to this court assailing the July 28, 2005
decision of the Court of Appeals Seventh (7th) Division granting respondent China Banking
Corporation’s petition as well as the resolution denying its motion for reconsideration.
In the decision dated February 4, 2008,18 the First (1st) Division of this court denied its
petition with the dispositive portion as follows:
WHEREFORE, we DENY the petition. The assailed Decision of the Court of Appeals in CA-G.R.
SP No. 88479 is AFFIRMED with the modification discussed above. Let the records of this case
be REMANDED to the RTC, Branch 138, Makati City, sitting as Commercial Court, for further
proceedings with dispatch to determine the merits of the petition for rehabilitation. No
costs.19
Petitioner Pryce Corporation filed an omnibus motion for (1) reconsideration or (2) partial
reconsideration and (3) referral to the court En Banc dated February 29, 2008. Respondent
China Banking Corporation also filed a motion for reconsideration on even date, praying that
the February 4, 2008 decision be set aside and reconsidered only insofar as it ordered the
remand of the case for further proceedings "to determine whether petitioner's financial
condition is serious and whether there is clear and imminent danger that it will lose its
corporate assets."20
By resolution dated June 16, 2008, this court denied with finality the separate motions for
reconsideration filed by the parties.
On September 10, 2008, petitioner Pryce Corporation filed a second motion for
reconsideration praying that the Court of Appeals’ decision dated February 4, 2008 be set
aside.
The First Division of this court referred this case to the En Banc en consulta by resolution
dated June 22, 2009.21 The court En Banc, in its resolution dated April 13, 2010, resolved to
accept this case.22
On July 30, 2013, petitioner Pryce Corporation and respondent China Banking Corporation,
through their respective counsel, filed a joint manifestation and motion to suspend
proceedings. The parties requested this court to defer its ruling on petitioner Pryce
Corporation’s second motion for reconsideration "so as to enable the parties to work out a
mutually acceptable arrangement."23
By resolution dated August 6, 2013, this court granted the motion but only for two (2) months.
The registry receipts showed that counsel for respondent China Banking Corporation and
counsel for petitioner Pryce Corporation received their copies of this resolution on September
5, 2013.24
More than two months had lapsed since September 5, 2013, but no agreement was filed by
the parties. Thus, we proceed to rule on petitioner Pryce Corporation’s second motion for
reconsideration.
This motion raises two grounds.
First, petitioner Pryce Corporation argues that the issue on the validity of the rehabilitation
court orders is now res judicata. Petitioner Pryce Corporation submits that the ruling in BPI
v. Pryce Corporation docketed as G.R. No. 180316 contradicts the present case, and it has
rendered the issue on the validity and regularity of the rehabilitation court orders as res
judicata.25
Second, petitioner Pryce Corporation contends that Rule 4, Section 6 of the Interim Rules of
Procedure on Corporate Rehabilitation26 does not require the rehabilitation court to hold a
111
hearing before issuing a stay order. Considering that the Interim Rules was promulgated later
than Rizal Commercial Banking Corp. v. IAC27 that enunciated the "serious situations" test,28
petitioner Pryce Corporation argues that the test has effectively been abandoned by the
"sufficiency in form and substance test" under the Interim Rules.29
The present second motion for reconsideration involves the following issues:
I. WHETHER THE ISSUE ON THE VALIDITY OF THE REHABILITATION ORDER DATED
JANUARY 17, 2005 IS NOW RES JUDICATA IN LIGHT OF BPI V. PRYCE CORPORATION
DOCKETED AS G.R. NO. 180316;
II. WHETHER THE REHABILITATION COURT IS REQUIRED TO HOLD A HEARING TO
COMPLY WITH THE "SERIOUS SITUATIONS" TEST LAID DOWN IN THE CASE OF RIZAL
COMMERCIAL BANKING CORP. V. IAC BEFORE ISSUING A STAY ORDER.
We proceed to discuss the first issue.
BPI v. Pryce Corporation docketed as G.R. No. 180316 rendered the issue on the validity of
the rehabilitation court’s January 17, 2005 order approving the amended rehabilitation plan
as res judicata.
In BPI v. Pryce Corporation, the Court of Appeals set aside initially the January 17, 2005 order
of the rehabilitation court.30 On reconsideration, the court set aside its original decision and
dismissed the petition.31 On appeal, this court denied the petition filed by BPI with finality.
An entry of judgment was made for BPI v. Pryce Corporation on June 2, 2008.32 In effect,
this court upheld the January 17, 2005 order of the rehabilitation court.
According to the doctrine of res judicata, "a final judgment or decree on the merits by a court
of competent jurisdiction is conclusive of the rights of the parties or their privies in all later
suits on all points and matters determined in the former suit."33
The elements for res judicata to apply are as follows: (a) the former judgment was final; (b)
the court that rendered it had jurisdiction over the subject matter and the parties; (c) the
judgment was based on the merits; and (d) between the first and the second actions, there
was an identity of parties, subject matters, and causes of action.34
Res judicata embraces two concepts: (1) bar by prior judgment35 and (2) conclusiveness of
judgment.36
Bar by prior judgment exists "when, as between the first case where the judgment was
rendered and the second case that is sought to be barred, there is identity of parties, subject
matter, and causes of action."37
On the other hand, the concept of conclusiveness of judgment finds application "when a fact
or question has been squarely put in issue, judicially passed upon, and adjudged in a former
suit by a court of competent jurisdiction."38 This principle only needs identity of parties and
issues to apply.39
The elements of res judicata through bar by prior judgment are present in this case.
On the element of identity of parties, res judicata does not require absolute identity of parties
as substantial identity is enough.40 Substantial identity of parties exists "when there is a
community of interest between a party in the first case and a party in the second case, even
if the latter was not impleaded in the first case."41 Parties that represent the same interests
in two petitions are, thus, considered substantial identity of parties for purposes of res
judicata.42 Definitely, one test to determine substantial identity of interest would be to see
whether the success or failure of one party materially affects the other.
In the present case, respondent China Banking Corporation and BPI are creditors of petitioner
Pryce Corporation and are both questioning the rehabilitation court’s approval of the amended
rehabilitation plan. Thus, there is substantial identity of parties since they are litigating for
the same matter and in the same capacity as creditors of petitioner Pryce Corporation.
There is no question that both cases deal with the subject matter of petitioner Pryce
Corporation’s rehabilitation. The element of identity of causes of action also exists.
In separate appeals, respondent China Banking Corporation and BPI questioned the same
January 17, 2005 order of the rehabilitation court before the Court of Appeals.
Since the January 17, 2005 order approving the amended rehabilitation plan was affirmed
and made final in G.R. No. 180316, this plan binds all creditors, including respondent China
Banking Corporation.
In any case, the Interim Rules or the rules in effect at the time the petition for corporate
rehabilitation was filed in 2004 adopts the cram-down principle which "consists of two things:
(i) approval despite opposition and (ii) binding effect of the approved plan x x x."43
First, the Interim Rules allows the rehabilitation court44 to "approve a rehabilitation plan even
over the opposition of creditors holding a majority of the total liabilities of the debtor if, in its
judgment, the rehabilitation of the debtor is feasible and the opposition of the creditors is
manifestly unreasonable."45
Second, it also provides that upon approval by the court, the rehabilitation plan and its
provisions "shall be binding upon the debtor and all persons who may be affected by it,
including the creditors, whether or not such persons have participated in the proceedings or
opposed the plan or whether or not their claims have been scheduled."46
112
Thus, the January 17, 2005 order approving the amended rehabilitation plan, now final and
executory resulting from the resolution of BPI v. Pryce Corporation docketed as G.R. No.
180316, binds all creditors including respondent China Banking Corporation.
This judgment in BPI v. Pryce Corporation covers necessarily the rehabilitation court’s
September 13, 2004 order giving due course to the petition. The general rule precluding
relitigation of issues extends to questions implied necessarily in the final judgment, viz:
The general rule precluding the relitigation of material facts or questions which were in issue
and adjudicated in former action are commonly applied to all matters essentially connected
with the subject matter of the litigation. Thus, it extends to questions necessarily implied in
the final judgment, although no specific finding may have been made in reference thereto and
although such matters were directly referred to in the pleadings and were not actually or
formally presented. x x x.47
The dispositive portion of the Court of Appeals’ decision in BPI v. Pryce Corporation, reversed
on reconsideration, only mentioned the January 17, 2005 order of the rehabilitation court
approving the amended rehabilitation plan. Nevertheless, the affirmation of its validity
necessarily included the September 13, 2004 order as this earlier order gave due course to
the petition and directed the rehabilitation receiver to evaluate and give recommendations on
the rehabilitation plan proposed by petitioner.48
In res judicata, the primacy given to the first case is related to the principle of immutability
of final judgments essential to an effective and efficient administration of justice, viz:
x x x [W]ell-settled is the principle that a decision that has acquired finality becomes
immutable and unalterable and may no longer be modified in any respect even if the
modification is meant to correct erroneous conclusions of fact or law and whether it will be
made by the court that rendered it or by the highest court of the land.
The reason for this is that litigation must end and terminate sometime and somewhere, and
it is essential to an effective and efficient administration of justice that, once a judgment has
become final, the winning party be not deprived of the fruits of the verdict. Courts must guard
against any scheme calculated to bring about that result and must frown upon any attempt
to prolong the controversies.
The only exceptions to the general rule are the correction of clerical errors, the so-called nunc
pro tunc entries which cause no prejudice to any party, void judgments, and whenever
circumstances transpire after the finality of the decision rendering its execution unjust and
inequitable.49 (Emphasis provided)
Generally, the later case is the one abated applying the maxim qui prior est tempore, potior
est jure (he who is before in time is the better in right; priority in time gives preference in
law).50 However, there are limitations to this rule as discussed in Victronics Computers, Inc.
v. Regional Trial Court, Branch 63, Makati:51
In our jurisdiction, the law itself does not specifically require that the pending action which
would hold in abatement the other must be a pending prior action. Thus, in Teodoro vs.
Mirasol, this Court observed:
It is to be noted that the Rules do not require as a ground for dismissal of a complaint that
there is a prior pending action. They provide that there is a pending action, not a pending
prior action. The fact that the unlawful detainer suit was of a later date is no bar to the
dismissal of the present action. We find, therefore, no error in the ruling of the court a quo
that plaintiff's action should be dismissed on the ground of the pendency of another more
appropriate action between the same parties and for the same cause.
In Roa-Magsaysay vs. Magsaysay, wherein it was the first case which was abated, this Court
ruled:
In any event, since We are not really dealing with jurisdiction but mainly with venue,
considering both courts concerned do have jurisdiction over the causes of action of the parties
herein against each other, the better rule in the event of conflict between two courts of
concurrent jurisdiction as in the present case, is to allow the litigation to be tried and decided
by the court which, under the circumstances obtaining in the controversy, would, in the mind
of this Court, be in a better position to serve the interests of justice, considering the nature
of the controversy, the comparative accessibility of the court to the parties, having in view
their peculiar positions and capabilities, and other similar factors. Without in any manner
casting doubt as to the capacity of the Court of First Instance of Zambales to adjudicate
properly cases involving domestic relations, it is easy to see that the Juvenile and Domestic
Relations Court of Quezon City which was created in order to give specialized attention to
family problems, armed as it is with adequate and corresponding facilities not available to
ordinary courts of first instance, would be able to attend to the matters here in dispute with
a little more degree of expertise and experience, resulting in better service to the interests of
justice. A reading of the causes of action alleged by the contending spouses and a
consideration of their nature, cannot but convince Us that, since anyway, there is an available
Domestic Court that can legally take cognizance of such family issues, it is better that said
Domestic Court be the one chosen to settle the same as the facts and the law may warrant.
We made the same pronouncement in Ramos vs. Peralta:
Finally, the rule on litis pendentia does not require that the later case should yield to the
earlier case. What is required merely is that there be another pending action, not a prior
pending action. Considering the broader scope of inquiry involved in Civil Case No. 4102 and
the location of the property involved, no error was committed by the lower court in deferring
to the Bataan court's jurisdiction.
113
An analysis of these cases unravels the ratio for the rejection of the priority-in-time rule and
establishes the criteria to determine which action should be upheld and which is to be abated.
In Teodoro, this Court used the criterion of the more appropriate action. We ruled therein that
the unlawful detainer case, which was filed later, was the more appropriate action because
the earlier case — for specific performance or declaratory relief — filed by the lessee (Teodoro)
in the Court of First Instance (CFI) to seek the extension of the lease for another two (2)
years or the fixing of a longer term for it, was "prompted by a desire on plaintiff's part to
anticipate the action for unlawful detainer, the probability of which was apparent from the
letter of the defendant to the plaintiff advising the latter that the contract of lease expired on
October 1, 1954." The real issue between the parties therein was whether or not the lessee
should be allowed to continue occupying the leased premises under a contract the terms of
which were also the subject matter of the unlawful detainer case. Consonant with the doctrine
laid down in Pue vs. Gonzales and Lim Si vs. Lim, the right of the lessee to occupy the land
leased against the lessor should be decided under Rule 70 of the Rules of Court; the fact that
the unlawful detainer case was filed later then of no moment. Thus, the latter was the more
appropriate action.
xxxx
In Roa-Magsaysay[,] the criterion used was the consideration of the interest of justice. In
applying this standard, what was asked was which court would be "in a better position to
serve the interests of justice," taking into account (a) the nature of the controversy, (b) the
comparative accessibility of the court to the parties and (c) other similar factors. While such
a test was enunciated therein, this Court relied on its constitutional authority to change venue
to avoid a miscarriage of justice.
It is interesting to note that in common law, as earlier adverted to, and pursuant to the
Teodoro vs. Mirasol case, the bona fides or good faith of the parties is a crucial element. In
the former, the second case shall not be abated if not brought to harass or vex; in the latter,
the first case shall be abated if it is merely an anticipatory action or, more appropriately, an
anticipatory defense against an expected suit — a clever move to steal the march from the
aggrieved party.52 (Emphasis provided and citations omitted)
None of these situations are present in the facts of this instant suit. In any case, it is the
better part of wisdom in protecting the creditors if the corporation is rehabilitated.
We now proceed to the second issue on whether the rehabilitation court is required to hold a
hearing to comply with the "serious situations" test laid down in Rizal Commercial Banking
Corp. v. IAC before issuing a stay order.
The rehabilitation court complied with the Interim Rules in its order dated July 13, 2004 on
the issuance of a stay order and appointment of Gener T. Mendoza as rehabilitation
receiver.53
The 1999 Rizal Commercial Banking Corp. v. IAC54 case provides for the "serious situations"
test in that the suspension of claims is counted only upon the appointment of a rehabilitation
receiver,55 and certain situations serious in nature must be shown to exist before one is
appointed, viz:
Furthermore, as relevantly pointed out in the dissenting opinion, a petition for rehabilitation
does not always result in the appointment of a receiver or the creation of a management
committee. The SEC has to initially determine whether such appointment is appropriate and
necessary under the circumstances. Under Paragraph (d), Section 6 of Presidential Decree
No. 902-A, certain situations must be shown to exist before a management committee may
be created or appointed, such as:
1. when there is imminent danger of dissipation, loss, wastage or destruction of assets
or other properties; or
2. when there is paralization of business operations of such corporations or entities
which may be prejudicial to the interest of minority stockholders, parties-litigants or
to the general public.
On the other hand, receivers may be appointed whenever:
1. necessary in order to preserve the rights of the parties-litigants; and/or
2. protect the interest of the investing public and creditors. (Section 6 [c], P.D. 902-
A.)
These situations are rather serious in nature, requiring the appointment of a management
committee or a receiver to preserve the existing assets and property of the corporation in
order to protect the interests of its investors and creditors. Thus, in such situations,
suspension of actions for claims against a corporation as provided in Paragraph (c) of Section
6, of Presidential Decree No. 902-A is necessary, and here we borrow the words of the late
Justice Medialdea, "so as not to render the SEC management Committee irrelevant and inutile
and to give it unhampered ‘rescue efforts’ over the distressed firm" (Rollo, p. 265)."
Otherwise, when such circumstances are not obtaining or when the SEC finds no such
imminent danger of losing the corporate assets, a management committee or rehabilitation
receiver need not be appointed and suspension of actions for claims may not be ordered by
the SEC. When the SEC does not deem it necessary to appoint a receiver or to create a
management committee, it may be assumed, that there are sufficient assets to sustain the
rehabilitation plan, and that the creditors and investors are amply protected.56
However, this case had been promulgated prior to the effectivity of the Interim Rules that
took effect on December 15, 2000.
114
Section 6 of the Interim Rules states explicitly that "[i]f the court finds the petition to be
sufficient in form and substance, it shall, not later than five (5) days from the filing of the
petition, issue an Order (a) appointing a Rehabilitation Receiver and fixing his bond; (b)
staying enforcement of all claims x x x."57
Compliant with the rules, the July 13, 2004 stay order was issued not later than five (5) days
from the filing of the petition on July 9, 2004 after the rehabilitation court found the petition
sufficient in form and substance.
We agree that when a petition filed by a debtor "alleges all the material facts and includes all
the documents required by Rule 4-2 [of the Interim Rules],"58 it is sufficient in form and
substance.
Nowhere in the Interim Rules does it require a comprehensive discussion in the stay order on
the court’s findings of sufficiency in form and substance.
The stay order and appointment of a rehabilitation receiver dated July 13, 2004 is an
"extraordinary, preliminary, ex parte remed[y]."59 The effectivity period of a stay order is
only "from the date of its issuance until dismissal of the petition or termination of the
rehabilitation proceedings."60 It is not a final disposition of the case. It is an interlocutory
order defined as one that "does not finally dispose of the case, and does not end the Court’s
task of adjudicating the parties’ contentions and determining their rights and liabilities as
regards each other, but obviously indicates that other things remain to be done by the
Court."61
Thus, it is not covered by the requirement under the Constitution that a decision must include
a discussion of the facts and laws on which it is based.62
Neither does the Interim Rules require a hearing before the issuance of a stay order. What it
requires is an initial hearing before it can give due course to63 or dismiss64 a petition.
Nevertheless, while the Interim Rules does not require the holding of a hearing before the
issuance of a stay order, neither does it prohibit the holding of one. Thus, the trial court has
ample discretion to call a hearing when it is not confident that the allegations in the petition
are sufficient in form and substance, for so long as this hearing is held within the five (5)-day
period from the filing of the petition — the period within which a stay order may issue as
provided in the Interim Rules.
One of the important objectives of the Interim Rules is "to promote a speedy disposition of
corporate rehabilitation cases[,] x x x apparent from the strict time frames, the non-
adversarial nature of the proceedings, and the prohibition of certain kinds of pleadings."65 It
is in light of this objective that a court with basis to issue a stay order must do so not later
than five (5) days from the date the petition was filed.66
Moreover, according to the November 17, 2000 memorandum submitted by the Supreme
Court Committee on the Interim Rules of Procedure on Corporate Rehabilitation:
The Proposed Rules remove the concept of the Interim Receiver and replace it with a
rehabilitation receiver. This is to justify the immediate issuance of the stay order because
under Presidential Decree No. 902-A, as amended, the suspension of actions takes effect only
upon appointment of the rehabilitation receiver.67 (Emphasis provided)
Even without this court going into the procedural issues, addressing the substantive merits of
the case will yield the same result.
Respondent China Banking Corporation mainly argues the violation of the constitutional
proscription against impairment of contractual obligations68 in that neither the provisions of
Pres. Dec. No. 902-A as amended nor the Interim Rules empower commercial courts "to
render without force and effect valid contractual stipulations."69
The non-impairment clause first appeared in the United States Constitution as a safeguard
against the issuance of worthless paper money that disturbed economic stability after the
American Revolution.70 This constitutional provision was designed to promote commercial
stability.71 At its core is "a prohibition of state interference with debtor-creditor
relationships."72
This clause first became operative in the Philippines through the Philippine Bill of 1902, the
fifth paragraph of Section 5 which states "[t]hat no law impairing the obligation of contracts
shall be enacted." It was consistently adopted in subsequent Philippine fundamental laws,
namely, the Jones Law of 1916,73 the 1935 Constitution,74 the 1973 Constitution,75 and the
present Constitution.76
Nevertheless, this court has brushed aside invocations of the non-impairment clause to give
way to a valid exercise of police power77 and afford protection to labor.78
In Pacific Wide Realty and Development Corporation v. Puerto Azul Land, Inc.79 which
similarly involved corporate rehabilitation, this court found no merit in Pacific Wide’s
invocation of the non-impairment clause, explaining as follows:
We also find no merit in PWRDC’s contention that there is a violation of the impairment clause.
Section 10, Article III of the Constitution mandates that no law impairing the obligations of
contract shall be passed. This case does not involve a law or an executive issuance declaring
the modification of the contract among debtor PALI, its creditors and its accommodation
mortgagors. Thus, the non-impairment clause may not be invoked. Furthermore, as held in
Oposa v. Factoran, Jr. even assuming that the same may be invoked, the non-impairment
clause must yield to the police power of the State. Property rights and contractual rights are
not absolute. The constitutional guaranty of non-impairment of obligations is limited by the
exercise of the police power of the State for the common good of the general public.
115
Successful rehabilitation of a distressed corporation will benefit its debtors, creditors,
employees, and the economy in general. The court may approve a rehabilitation plan even
over the opposition of creditors holding a majority of the total liabilities of the debtor if, in its
judgment, the rehabilitation of the debtor is feasible and the opposition of the creditors is
manifestly unreasonable. The rehabilitation plan, once approved, is binding upon the debtor
and all persons who may be affected by it, including the creditors, whether or not such persons
have participated in the proceedings or have opposed the plan or whether or not their claims
have been scheduled.80
Corporate rehabilitation is one of many statutorily provided remedies for businesses that
experience a downturn. Rather than leave the various creditors unprotected, legislation now
provides for an orderly procedure of equitably and fairly addressing their concerns. Corporate
rehabilitation allows a court-supervised process to rejuvenate a corporation. Its twin,
insolvency, provides for a system of liquidation and a procedure of equitably settling various
debts owed by an individual or a business. It provides a corporation’s owners a sound chance
to re-engage the market, hopefully with more vigor and enlightened services, having learned
from a painful experience.
Necessarily, a business in the red and about to incur tremendous losses may not be able to
pay all its creditors. Rather than leave it to the strongest or most resourceful amongst all of
them, the state steps in to equitably distribute the corporation’s limited resources.
The cram-down principle adopted by the Interim Rules does, in effect, dilute contracts. When
it permits the approval of a rehabilitation plan even over the opposition of creditors,81 or
when it imposes a binding effect of the approved plan on all parties including those who did
not participate in the proceedings,82 the burden of loss is shifted to the creditors to allow the
corporation to rehabilitate itself from insolvency.
Rather than let struggling corporations slip and vanish, the better option is to allow
commercial courts to come in and apply the process for corporate rehabilitation.
This option is preferred so as to avoid what Garrett Hardin called the Tragedy of Commons.
Here, Hardin submits that "coercive government regulation is necessary to prevent the
degradation of common-pool resources [since] individual resource appropriators receive the
full benefit of their use and bear only a share of their cost."83 By analogy to the game theory,
this is the prisoner’s dilemma: "Since no individual has the right to control or exclude others,
each appropriator has a very high discount rate [with] little incentive to efficiently manage
the resource in order to guarantee future use."84 Thus, the cure is an exogenous policy to
equitably distribute scarce resources. This will incentivize future creditors to continue lending,
resulting in something productive rather than resulting in nothing.
In fact, these corporations exist within a market. The General Theory of Second Best holds
that "correction for one market imperfection will not necessarily be efficiency-enhancing
unless [there is also] simultaneous [correction] for all other market imperfections."85 The
correction of one market imperfection may adversely affect market efficiency elsewhere, for
instance, "a contract rule that corrects for an imperfection in the market for consensual
agreements may [at the same time] induce welfare losses elsewhere."86 This theory is one
justification for the passing of corporate rehabilitation laws allowing the suspension of
payments so that corporations can get back on their feet.
As in all markets, the environment is never guaranteed. There are always risks.1avvphi1
Contracts are indeed sacred as the law between the parties. However, these contracts exist
within a society where nothing is risk-free, and the government is constantly being called to
attend to the realities of the times.
Corporate rehabilitation is preferred for addressing social costs.1âwphi1 Allowing the
corporation room to get back on its feet will retain if not increase employment opportunities
for the market as a whole. Indirectly, the services offered by the corporation will also benefit
the market as "[t]he fundamental impulse that sets and keeps the capitalist engine in motion
comes from [the constant entry of] new consumers’ goods, the new methods of production
or transportation, the new markets, [and] the new forms of industrial organization that
capitalist enterprise creates."87
As a final note, this is not the first time this court was made to review two separate petitions
appealed from two conflicting decisions, rendered by two divisions of the Court of Appeals,
and originating from the same case. In Serrano v. Ambassador Hotel, Inc.,88 we ordered the
Court of Appeals to adopt immediately a more efficient system in its Internal Rules to avoid
situations as this.
In this instance, it is fortunate that this court had the opportunity to correct the situation and
prevent conflicting judgments from reaching impending finality with the referral to the En
Banc.
We reiterate the need for our courts to be "constantly vigilant in extending their judicial gaze
to cases related to the matters submitted for their resolution"89 as to "ensure against judicial
confusion and [any] seeming conflict in the judiciary’s decisions."90
WHEREFORE, petitioner Pryce Corporation's motion is GRANTED. This court's February 4,
2008 decision is RECONSIDERED and SET ASIDE.
SO ORDERED.
G.R. No. 71813 July 20, 1987
ROSALINA PEREZ ABELLA/HDA. DANAO-RAMONA, petitioners,
vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, ROMEO QUITCO and
RICARDO DIONELE, SR., respondents.
116
PARAS, J.:
This is a petition for review on certiorari of the April 8, 1985 Resolution of the Ministry of
Labor and Employment affirming the July 16, 1982 Decision of the Labor Arbiter, which ruled
in favor of granting separation pay to private respondents.
On June 27, 1960, herein petitioner Rosalina Perez Abella leased a farm land in Monteverde,
Negros Occidental, known as Hacienda Danao-Ramona, for a period of ten (10) years,
renewable, at her option, for another ten (10) years (Rollo, pp. 16-20).
On August 13, 1970, she opted to extend the lease contract for another ten (10) years (Ibid,
pp. 26-27).
During the existence of the lease, she employed the herein private respondents. Private
respondent Ricardo Dionele, Sr. has been a regular farm worker since 1949 and he was
promoted to Cabo in 1963. On the other hand, private respondent Romeo Quitco started as
a regular employee in 1968 and was promoted to Cabo in November of the same year.
Upon the expiration of her leasehold rights, petitioner dismissed private respondents and
turned over the hacienda to the owners thereof on October 5, 1981, who continued the
management, cultivation and operation of the farm (Rollo, pp. 33; 89).
On November 20, 1981, private respondents filed a complaint against the petitioner at the
Ministry of Labor and Employment, Bacolod City District Office, for overtime pay, illegal
dismissal and reinstatement with backwages. After the parties had presented their respective
evidence, Labor Arbiter Manuel M. Lucas, Jr., in a Decision dated July 16, 1982 (Ibid, pp. 29-
31), ruled that the dismissal is warranted by the cessation of business, but granted the private
respondents separation pay. Pertinent portion of the dispositive portion of the Decision reads:
In the instant case, the respondent closed its business operation not by reason of
business reverses or losses. Accordingly, the award of termination pay in complainants'
favor is warranted.
WHEREFORE, the respondent is hereby ordered to pay the complainants separation
pay at the rate of half-month salary for every year of service, a fraction of six (6)
months being considered one (1) year. (Rollo pp. 29-30)
On appeal on August 11, 1982, the National Labor Relations Commission, in a Resolution
dated April 8, 1985 (Ibid, pp. 3940), affirmed the decision and dismissed the appeal for lack
of merit.
On May 22, 1985, petitioner filed a Motion for Reconsideration (Ibid, pp. 41-45), but the same
was denied in a Resolution dated June 10, 1985 (Ibid, p. 46). Hence, the present petition
(Ibid, pp. 3-8).
The First Division of this Court, in a Resolution dated September 16, 1985, resolved to require
the respondents to comment (Ibid, p. 58). In compliance therewith, private respondents filed
their Comment on October 23, 1985 (Ibid, pp. 53-55); and the Solicitor General on December
17, 1985 (Ibid, pp. 71-73-B).
On February 19, 1986, petitioner filed her Consolidated Reply to the Comments of private and
public respondents (Ibid, pp. 80-81).
The First Division of this Court, in a Resolution dated March 31, 1986, resolved to give due
course to the petition; and to require the parties to submit simultaneous memoranda (Ibid.,
p. 83). In compliance therewith, the Solicitor General filed his Memorandum on June 18, 1986
(Ibid, pp. 89-94); and petitioner on July 23, 1986 (Ibid, pp. 96-194).
The petition is devoid of merit.
The sole issue in this case is —
WHETHER OR NOT PRIVATE RESPONDENTS ARE ENTITLED TO SEPARATION PAY.
Petitioner claims that since her lease agreement had already expired, she is not liable for
payment of separation pay. Neither could she reinstate the complainants in the farm as this
is a complete cessation or closure of a business operation, a just cause for employment
termination under Article 272 of the Labor Code.
On the other hand, the legal basis of the Labor Arbiter in granting separation pay to the
private respondents is Batas Pambansa Blg. 130, amending the Labor Code, Section 15 of
which, specifically provides:
Sec 15 Articles 285 and 284 of the Labor Code are hereby amended to read as follows:
xxx xxx xxx
Art. 284. Closure of establishment and reduction of personnel. — The employer may
also terminate the employment of any employee due to the installation of labor-saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establisment or undertaking unless the closing is for the purpose of
circumventing the provisions of this title, by serving a written notice on the workers
and the Ministry of Labor and Employment at least one (1) month before the intended
date thereof. In case of termination due to the installation of labor-saving devices or
117
 redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closure or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall be equivalent to
one (1) month pay or at least one-half (1/2) month pay for every year of service
whichever is higher. A fraction of at least six (6) months shall be considered one (1)
whole year.1avvphi1
There is no question that Article 284 of the Labor Code as amended by BP 130 is the law
applicable in this case.
Article 272 of the same Code invoked by the petitioner pertains to the just causes of
termination. The Labor Arbiter does not argue the justification of the termination of
employment but applied Article 284 as amended, which provides for the rights of the
employees under the circumstances of termination.
Petitioner then contends that the aforequoted provision violates the constitutional guarantee
against impairment of obligations and contracts, because when she leased Hacienda Danao-
Ramona on June 27, 1960, neither she nor the lessor contemplated the creation of the
obligation to pay separation pay to workers at the end of the lease.
Such contention is untenable.
This issue has been laid to rest in the case of Anucension v. National Labor Union (80 SCRA
368-369 [1977]) where the Supreme Court ruled:
It should not be overlooked, however, that the prohibition to impair the obligation of
contracts is not absolute and unqualified. The prohibition is general, affording a broad
outline and requiring construction to fill in the details. The prohibition is not to read
with literal exactness like a mathematical formula for it prohibits unreasonable
impairment only. In spite of the constitutional prohibition the State continues to
possess authority to safeguard the vital interests of its people. Legislation appropriate
to safeguard said interest may modify or abrogate contracts already in effect. For not
only are existing laws read into contracts in order to fix the obligations as between the
parties but the reservation of essential attributes of sovereign power is also read into
contracts as a postulate of the legal order. All contracts made with reference to any
matter that is subject to regulation under the police power must be understood as
made in reference to the possible exercise of that power. Otherwise, important and
valuable reforms may be precluded by the simple device of entering into contracts for
the purpose of doing that which otherwise maybe prohibited. ...
In order to determine whether legislation unconstitutionally impairs contract of
obligations, no unchanging yardstick, applicable at all times and under all
circumstances, by which the validity of each statute may be measured or determined,
has been fashioned, but every case must be determined upon its own circumstances.
Legislation impairing the obligation of contracts can be sustained when it is enacted
for the promotion of the general good of the people, and when the means adopted
must be legitimate, i.e. within the scope of the reserved power of the state construed
in harmony with the constitutional limitation of that power. (Citing Basa vs. Federacion
Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas [FOITAF] [L-
27113], November 19, 1974; 61 SCRA 93,102-113]).
The purpose of Article 284 as amended is obvious-the protection of the workers whose
employment is terminated because of the closure of establishment and reduction of personnel.
Without said law, employees like private respondents in the case at bar will lose the benefits
to which they are entitled — for the thirty three years of service in the case of Dionele and
fourteen years in the case of Quitco. Although they were absorbed by the new management
of the hacienda, in the absence of any showing that the latter has assumed the responsibilities
of the former employer, they will be considered as new employees and the years of service
behind them would amount to nothing.
Moreover, to come under the constitutional prohibition, the law must effect a change in the
rights of the parties with reference to each other and not with reference to non-parties.
As correctly observed by the Solicitor General, Article 284 as amended refers to employment
benefits to farm hands who were not parties to petitioner's lease contract with the owner of
Hacienda Danao-Ramona. That contract cannot have the effect of annulling subsequent
legislation designed to protect the interest of the working class.
In any event, it is well-settled that in the implementation and interpretation of the provisions
of the Labor Code and its implementing regulations, the workingman's welfare should be the
primordial and paramount consideration. (Volshel Labor Union v. Bureau of Labor Relations,
137 SCRA 43 [1985]). It is the kind of interpretation which gives meaning and substance to
the liberal and compassionate spirit of the law as provided for in Article 4 of the New Labor
Code which states that "all doubts in the implementation and interpretation of the provisions
of this Code including its implementing rules and regulations shall be resolved in favor of
labor." The policy is to extend the applicability of the decree to a greater number of employees
who can avail of the benefits under the law, which is in consonance with the avowed policy of
the State to give maximum aid and protection to labor. (Sarmiento v. Employees
Compensation Commission, 144 SCRA 422 [1986] citing Cristobal v. Employees
Compensation Commission, 103 SCRA 329; Acosta v. Employees Compensation Commission,
109 SCRA 209).
PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the July 16, 1982
Decision of the Labor Arbiter and the April 8, 1985 Resolution of the Ministry of Labor and
Employment are hereby AFFIRMED.
118
SO ORDERED.
G.R. No. 170054 January 21, 2013
GOYA, INC., Petitioner,
vs.
GOYA, INC. EMPLOYEES UNION-FFW, Respondent.
DECISION
PERALTA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Civil Procedure seeks to
reverse and set aside the June 16, 2005 Decision 1 and October 12, 2005 Resolution2 of the
Court of Appeals in CA-G.R. SP No. 87335, which sustained the October 26, 2004 Decision 3
of Voluntary Arbitrator Bienvenido E. Laguesma, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered declaring that the Company is NOT guilty of unfair
labor practice in engaging the services of PESO.
The company is, however, directed to observe and comply with its commitment as it pertains
to the hiring of casual employees when necessitated by business circumstances.4
The facts are simple and appear to be undisputed.
Sometime in January 2004, petitioner Goya, Inc. (Company), a domestic corporation engaged
in the manufacture, importation, and wholesale of top quality food products, hired contractual
employees from PESO Resources Development Corporation (PESO) to perform temporary and
occasional services in its factory in Parang, Marikina City. This prompted respondent Goya,
Inc. Employees Union–FFW (Union) to request for a grievance conference on the ground that
the contractual workers do not belong to the categories of employees stipulated in the existing
Collective Bargaining Agreement (CBA).5 When the matter remained unresolved, the
grievance was referred to the National Conciliation and Mediation Board (NCMB) for voluntary
arbitration.
During the hearing on July 1, 2004, the Company and the Union manifested before Voluntary
Arbitrator (VA) Bienvenido E. Laguesma that amicable settlement was no longer possible;
hence, they agreed to submit for resolution the solitary issue of "[w]hether or not the
Company is guilty of unfair labor acts in engaging the services of PESO, a third party service
provider, under the existing CBA, laws, and jurisprudence."6 Both parties thereafter filed their
respective pleadings.
The Union asserted that the hiring of contractual employees from PESO is not a management
prerogative and in gross violation of the CBA tantamount to unfair labor practice (ULP). It
noted that the contractual workers engaged have been assigned to work in positions
previously handled by regular workers and Union members, in effect violating Section 4,
Article I of the CBA, which provides for three categories of employees in the Company, to wit:
Section 4. Categories of Employees.– The parties agree on the following categories of
employees:
(a) Probationary Employee. – One hired to occupy a regular rank-and-file position in the
Company and is serving a probationary period. If the probationary employee is hired or comes
from outside the Company (non-Goya, Inc. employee), he shall be required to undergo a
probationary period of six (6) months, which period, in the sole judgment of management,
may be shortened if the employee has already acquired the knowledge or skills required of
the job. If the employee is hired from the casual pool and has worked in the same position at
any time during the past two (2) years, the probationary period shall be three (3) months.
(b) Regular Employee. – An employee who has satisfactorily completed his probationary
period and automatically granted regular employment status in the Company.
(c) Casual Employee, – One hired by the Company to perform occasional or seasonal work
directly connected with the regular operations of the Company, or one hired for specific
projects of limited duration not connected directly with the regular operations of the Company.
It was averred that the categories of employees had been a part of the CBA since the 1970s
and that due to this provision, a pool of casual employees had been maintained by the
Company from which it hired workers who then became regular workers when urgently
necessary to employ them for more than a year. Likewise, the Company sometimes hired
probationary employees who also later became regular workers after passing the probationary
period. With the hiring of contractual employees, the Union contended that it would no longer
have probationary and casual employees from which it could obtain additional Union
members; thus, rendering inutile Section 1, Article III (Union Security) of the CBA, which
states:
Section 1. Condition of Employment. – As a condition of continued employment in the
Company, all regular rank-and-file employees shall remain members of the Union in good
standing and that new employees covered by the appropriate bargaining unit shall
automatically become regular employees of the Company and shall remain members of the
Union in good standing as a condition of continued employment.
The Union moreover advanced that sustaining the Company’s position would easily weaken
and ultimately destroy the former with the latter’s resort to retrenchment and/or retirement
of employees and not filling up the vacant regular positions through the hiring of contractual
119
workers from PESO, and that a possible scenario could also be created by the Company
wherein it could "import" workers from PESO during an actual strike.
In countering the Union’s allegations, the Company argued that: (a) the law expressly allows
contracting and subcontracting arrangements through Department of Labor and Employment
(DOLE) Order No. 18-02; (b) the engagement of contractual employees did not, in any way,
prejudice the Union, since not a single employee was terminated and neither did it result in a
reduction of working hours nor a reduction or splitting of the bargaining unit; and (c) Section
4, Article I of the CBA merely provides for the definition of the categories of employees and
does not put a limitation on the Company’s right to engage the services of job contractors or
its management prerogative to address temporary/occasional needs in its operation.
On October 26, 2004, VA Laguesma dismissed the Union’s charge of ULP for being purely
speculative and for lacking in factual basis, but the Company was directed to observe and
comply with its commitment under the CBA. The VA opined:
We examined the CBA provision Section 4, Article I of the CBAallegedly violated by the
Company and indeed the agreement prescribes three (3) categories of employees in the
Company and provides for the definition, functions and duties of each. Material to the case at
hand is the definition as regards the functions of a casual employee described as follows:
Casual Employee – One hired by the COMPANY to perform occasional or seasonal work directly
connected with the regular operations of the COMPANY, or one hired for specific projects of
limited duration not connected directly with the regular operations of the COMPANY.
While the foregoing agreement between the parties did eliminate management’s prerogative
of outsourcing parts of its operations, it serves as a limitation on such prerogative particularly
if it involves functions or duties specified under the aforequoted agreement. It is clear that
the parties agreed that in the event that the Company needs to engage the services of
additional workers who will perform "occasional or seasonal work directly connected with the
regular operations of the COMPANY," or "specific projects of limited duration not connected
directly with the regular operations of the COMPANY", the Company can hire casual employees
which is akin to contractual employees. If we note the Company’s own declaration that PESO
was engaged to perform "temporary or occasional services" (See the Company’s Position
Paper, at p. 1), then it should have directly hired the services of casual employees rather than
do it through PESO.
It is evident, therefore, that the engagement of PESO is not in keeping with the intent and
spirit of the CBA provision in question. It must, however, be stressed that the right of
management to outsource parts of its operations is not totally eliminated but is merely limited
by the CBA. Given the foregoing, the Company’s engagement of PESO for the given purpose
is indubitably a violation of the CBA.7
While the Union moved for partial reconsideration of the VA Decision,8 the Company
immediately filed a petition for review 9 before the Court of Appeals (CA) under Rule 43 of the
Revised Rules of Civil Procedure to set aside the directive to observe and comply with the CBA
commitment pertaining to the hiring of casual employees when necessitated by business
circumstances. Professing that such order was not covered by the sole issue submitted for
voluntary arbitration, the Company assigned the following errors:
THE HONORABLE VOLUNTARY ARBITRATOR EXCEEDED HIS POWER WHICH WAS EXPRESSLY
GRANTED AND LIMITED BY BOTH PARTIES IN RULING THAT THE ENGAGEMENT OF PESO IS
NOT IN KEEPING WITH THE INTENT AND SPIRIT OF THE CBA.10
THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED A PATENT AND PALPABLE ERROR IN
DECLARING THAT THE ENGAGEMENT OF PESO IS NOT IN KEEPING WITH THE INTENT AND
SPIRIT OF THE CBA.11
On June 16, 2005, the CA dismissed the petition. In dispensing with the merits of the
controversy, it held:
This Court does not find it arbitrary on the part of the Hon. Voluntary Arbitrator in ruling that
"the engagement of PESO is not in keeping with the intent and spirit of the CBA." The said
ruling is interrelated and intertwined with the sole issue to be resolved that is, "Whether or
not the Company is guilty of unfair labor practice in engaging the services of PESO, a third
party service provider, under existing CBA, laws, and jurisprudence." Both issues concern the
engagement of PESO by the Company which is perceived as a violation of the CBA and which
constitutes as unfair labor practice on the part of the Company. This is easily discernible in
the decision of the Hon. Voluntary Arbitrator when it held:
x x x x While the engagement of PESO is in violation of Section 4, Article I of the CBA, it does
not constitute unfair labor practice as it (sic) not characterized under the law as a gross
violation of the CBA. Violations of a CBA, except those which are gross in character, shall no
longer be treated as unfair labor practice. Gross violations of a CBA means flagrant and/or
malicious refusal to comply with the economic provisions of such agreement. x x x
Anent the second assigned error, the Company contends that the Hon. Voluntary Arbitrator
erred in declaring that the engagement of PESO is not in keeping with the intent and spirit of
the CBA. The Company justified its engagement of contractual employees through PESO as a
management prerogative, which is not prohibited by law. Also, it further alleged that no
provision under the CBA limits or prohibits its right to contract out certain services in the
exercise of management prerogatives.
Germane to the resolution of the above issue is the provision in their CBA with respect to the
categories of the employees:
xxxx
120
A careful reading of the above-enumerated categories of employees reveals that the PESO
contractual employees do not fall within the enumerated categories of employees stated in
the CBA of the parties. Following the said categories, the Company should have observed and
complied with the provision of their CBA. Since the Company had admitted that it engaged
the services of PESO to perform temporary or occasional services which is akin to those
performed by casual employees, the Company should have tapped the services of casual
employees instead of engaging PESO.
In justifying its act, the Company posits that its engagement of PESO was a management
prerogative. It bears stressing that a management prerogative refers to the right of the
employer to regulate all aspects of employment, such as the freedom to prescribe work
assignments, working methods, processes to be followed, regulation regarding transfer of
employees, supervision of their work, lay-off and discipline, and dismissal and recall of work,
presupposing the existence of employer-employee relationship. On the basis of the foregoing
definition, the Company’s engagement of PESO was indeed a management prerogative. This
is in consonance with the pronouncement of the Supreme Court in the case of Manila Electric
Company vs. Quisumbing where it ruled that contracting out of services is an exercise of
business judgment or management prerogative.
This management prerogative of contracting out services, however, is not without limitation.
In contracting out services, the management must be motivated by good faith and the
contracting out should not be resorted to circumvent the law or must not have been the result
of malicious arbitrary actions. In the case at bench, the CBA of the parties has already
provided for the categories of the employees in the Company’sestablishment. These
categories of employees particularly with respect to casual employees serve as limitation to
the Company’s prerogative to outsource parts of its operations especially when hiring
contractual employees. As stated earlier, the work to be performed by PESO was similar to
that of the casual employees. With the provision on casual employees, the hiring of PESO
contractual employees, therefore, is not in keeping with the spirit and intent of their CBA.
(Citations omitted)12
The Company moved to reconsider the CA Decision,13 but it was denied;14 hence, this petition.
Incidentally, on July 16, 2009, the Company filed a Manifestation 15 informing this Court that
its stockholders and directors unanimously voted to shorten the Company’s corporate
existence only until June 30, 2006, and that the three-year period allowed by law for
liquidation of the Company’s affairs already expired on June 30, 2009. Referring to Gelano v.
Court of Appeals,16 Public Interest Center, Inc. v. Elma,17 and Atienza v. Villarosa,18 it urged
Us, however, to still resolve the case for future guidance of the bench and the bar as the issue
raised herein allegedly calls for a clarification of a legal principle, specifically, whether the VA
is empowered to rule on a matter not covered by the issue submitted for arbitration.
Even if this Court would brush aside technicality by ignoring the supervening event that
renders this case moot and academic19 due to the permanent cessation of the Company’s
business operation on June 30, 2009, the arguments raised in this petition still fail to convince
Us.
We confirm that the VA ruled on a matter that is covered by the sole issue submitted for
voluntary arbitration. Resultantly, the CA did not commit serious error when it sustained the
ruling that the hiring of contractual employees from PESO was not in keeping with the intent
and spirit of the CBA. Indeed, the opinion of the VA is germane to, or, in the words of the CA,
"interrelated and intertwined with," the sole issue submitted for resolution by the parties. This
being said, the Company’s invocation of Sections 4 and 5, Rule IV 20 and Section 5, Rule VI21
of the Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings dated
October 15, 2004 issued by the NCMB is plainly out of order.
Likewise, the Company cannot find solace in its cited case of Ludo & Luym Corporation v.
Saornido.22 In Ludo, the company was engaged in the manufacture of coconut oil, corn starch,
glucose and related products. In the course of its business operations, it engaged the arrastre
services of CLAS for the loading and unloading of its finished products at the wharf. The
arrastre workers deployed by CLAS to perform the services needed were subsequently hired,
on different dates, as Ludo’s regular rank-and-file employees. Thereafter, said employees
joined LEU, which acted as the exclusive bargaining agent of the rank-and-file employees.
When LEU entered into a CBA with Ludo, providing for certain benefits to the employees (the
amount of which vary according to the length of service rendered), it requested to include in
its members’ period of service the time during which they rendered arrastre services so that
they could get higher benefits. The matter was submitted for voluntary arbitration when Ludo
failed to act. Per submission agreement executed by both parties, the sole issue for resolution
was the date of regularization of the workers. The VA Decision ruled that: (1) the subject
employees were engaged in activities necessary and desirable to the business of Ludo, and
(2) CLAS is a labor-only contractor of Ludo. It then disposed as follows: (a) the complainants
were considered regular employees six months from the first day of service at CLAS; (b) the
complainants, being entitled to the CBA benefits during the regular employment, were
awarded sick leave, vacation leave, and annual wage and salary increases during such period;
(c) respondents shall pay attorney’s fees of 10% of the total award; and (d) an interest of
12% per annum or 1% per month shall be imposed on the award from the date of
promulgation until fully paid. The VA added that all separation and/or retirement benefits shall
be construed from the date of regularization subject only to the appropriate government laws
and other social legislation. Ludo filed a motion for reconsideration, but the VA denied it. On
appeal, the CA affirmed in toto the assailed decision; hence, a petition was brought before
this Court raising the issue, among others, of whether a voluntary arbitrator can award
benefits not claimed in the submission agreement. In denying the petition, We ruled:
Generally, the arbitrator is expected to decide only those questions expressly delineated by
the submission agreement. Nevertheless, the arbitrator can assume that he has the necessary
power to make a final settlement since arbitration is the final resort for the adjudication of
disputes. The succinct reasoning enunciated by the CA in support of its holding, that the
Voluntary Arbitrator in a labor controversy has jurisdiction to render the questioned arbitral
awards, deserves our concurrence, thus:
121
In general, the arbitrator is expected to decide those questions expressly stated and limited
in the submission agreement. However, since arbitration is the final resort for the adjudication
of disputes, the arbitrator can assume that he has the power to make a final settlement. Thus,
assuming that the submission empowers the arbitrator to decide whether an employee was
discharged for just cause, the arbitrator in this instance can reasonably assume that his
powers extended beyond giving a yes-or-no answer and included the power to reinstate him
with or without back pay.
In one case, the Supreme Court stressed that "xxx the Voluntary Arbitrator had plenary
jurisdiction and authority to interpret the agreement to arbitrate and to determine the scope
of his own authority subject only, in a proper case, to the certiorari jurisdiction of this Court.
The Arbitrator, as already indicated, viewed his authority as embracing not merely the
determination of the abstract question of whether or not a performance bonus was to be
granted but also, in the affirmative case, the amount thereof.
By the same token, the issue of regularization should be viewed as two-tiered issue. While
the submission agreement mentioned only the determination of the date or regularization,
law and jurisprudence give the voluntary arbitrator enough leeway of authority as well as
adequate prerogative to accomplish the reason for which the law on voluntary arbitration was
created – speedy labor justice. It bears stressing that the underlying reason why this case
arose is to settle, once and for all, the ultimate question of whether respondent employees
are entitled to higher benefits. To require them to file another action for payment of such
benefits would certainly undermine labor proceedings and contravene the constitutional
mandate providing full protection to labor.23
Indubitably, Ludo fortifies, not diminishes, the soundness of the questioned VA Decision. Said
case reaffirms the plenary jurisdiction and authority of the voluntary arbitrator to interpret
the CBA and to determine the scope of his/her own authority. Subject to judicial review, the
leeway of authority as well as adequate prerogative is aimed at accomplishing the rationale
of the law on voluntary arbitration – speedy labor justice. In this case, a complete and final
adjudication of the dispute between the parties necessarily called for the resolution of the
related and incidental issue of whether the Company still violated the CBA but without being
guilty of ULP as, needless to state, ULP is committed only if there is gross violation of the
agreement.
Lastly, the Company kept on harping that both the VA and the CA conceded that its
engagement of contractual workers from PESO was a valid exercise of management
prerogative. It is confused. To emphasize, declaring that a particular act falls within the
concept of management prerogative is significantly different from acknowledging that such
act is a valid exercise thereof. What the VA and the CA correctly ruled was that the Company’s
act of contracting out/outsourcing is within the purview of management prerogative. Both did
not say, however, that such act is a valid exercise thereof. Obviously, this is due to the
recognition that the CBA provisions agreed upon by the Company and the Union delimit the
free exercise of management prerogative pertaining to the hiring of contractual employees.
Indeed, the VA opined that "the right of the management to outsource parts of its operations
is not totally eliminated but is merely limited by the CBA," while the CA held that "this
management prerogative of contracting out services, however, is not without limitation. x x
x These categories of employees particularly with respect to casual employees serve as
limitation to the Company’s prerogative to outsource parts of its operations especially when
hiring contractual employees."
A collective bargaining agreement is the law between the parties:
It is familiar and fundamental doctrine in labor law that the CBA is the law between the parties
and they are obliged to comply with its provisions. We said so in Honda Phils., Inc. v. Samahan
ng Malayang Manggagawa sa Honda:
A collective bargaining agreement or CBA refers to the negotiated contract between a
legitimate labor organization and the employer concerning wages, hours of work and all other
terms and conditions of employment in a bargaining unit.1âwphi1 As in all contracts, the
parties in a CBA may establish such stipulations, clauses, terms and conditions as they may
deem convenient provided these are not contrary to law, morals, good customs, public order
or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between
the parties and compliance therewith is mandated by the express policy of the law.
Moreover, if the terms of a contract, as in a CBA, are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of their stipulations shall control. x x
x.24
In this case, Section 4, Article I (on categories of employees) of the CBA between the
Company and the Union must be read in conjunction with its Section 1, Article III (on union
security). Both are interconnected and must be given full force and effect. Also, these
provisions are clear and unambiguous. The terms are explicit and the language of the CBA is
not susceptible to any other interpretation. Hence, the literal meaning should prevail. As
repeatedly held, the exercise of management prerogative is not unlimited; it is subject to the
limitations found in law, collective bargaining agreement or the general principles of fair play
and justice25 Evidently, this case has one of the restrictions- the presence of specific CBA
provisions-unlike in San Miguel Corporation Employees Union-PTGWO v. Bersamira,26 De
Ocampo v. NLRC,27 Asian Alcohol Corporation v. NLRC,28 and Serrano v. NLRC29cited by the
Company. To reiterate, the CBA is the norm of conduct between the parties and compliance
therewith is mandated by the express policy of the law.30
WHEREFORE, the petition is DENIED. The assailed June 16, 2005 Decision, as well as the
October 12, 2005 Resolution of the Court of Appeals, which sustained the October 26, 2004
Decision of the Voluntary Arbitrator, are hereby AFFIRMED.
SO ORDERED.
122
G.R. No. 204819 April 8, 2014
JAMES M. IMBONG and LOVELY-ANN C. IMBONG, for themselves and in behalf of
their minor children, LUCIA CARLOS IMBONG and BERNADETTE CARLOS IMBONG
and MAGNIFICAT CHILD DEVELOPMENT CENTER, INC., Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON. FLORENCIO B. ABAD,
Secretary, Department of Budget and Management, HON. ENRIQUE T. ONA,
Secretary, Department of Health, HON. ARMIN A. LUISTRO, Secretary, Department
of Education, Culture and Sports and HON. MANUELA. ROXAS II, Secretary,
Department of Interior and Local Government, Respondents.
x---------------------------------x
G.R. No. 204934
ALLIANCE FOR THE FAMILY FOUNDATION PHILIPPINES, INC. [ALFI], represented
by its President, Maria Concepcion S. Noche, Spouses Reynaldo S. Luistro & Rosie B
. Luistro, Jose S. Sandejas & Elenita S.A. Sandejas, Arturo M. Gorrez & Marietta C.
Gorrez, Salvador S. Mante, Jr. & Hazeleen L. Mante, Rolando M. Bautista & Maria
Felisa S. Bautista, Desiderio Racho & Traquilina Racho, F emand Antonio A.
Tansingco & Carol Anne C. Tansingco for themselves and on behalf of their minor
children, Therese Antonette C. Tansingco, Lorenzo Jose C. Tansingco, Miguel F
emando C. Tangsingco, Carlo Josemaria C. Tansingco & Juan Paolo C. Tansingco,
Spouses Mariano V. Araneta & Eileen Z. Araneta for themselves and on behalf of
their minor children, Ramon Carlos Z. Araneta & Maya Angelica Z. Araneta, Spouses
Renato C. Castor & Mildred C. Castor for themselves and on behalf of their minor
children, Renz Jeffrey C. Castor, Joseph Ramil C. Castor, John Paul C. Castor &
Raphael C. Castor, Spouses Alexander R. Racho & Zara Z. Racho for themselves and
on behalf of their minor children Margarita Racho, Mikaela Racho, Martin Racho,
Mari Racho & Manolo Racho, Spouses Alfred R. Racho & Francine V. Racho for
themselves and on behalf of their minor children Michael Racho, Mariana Racho,
Rafael Racho, Maxi Racho, Chessie Racho & Laura Racho, Spouses David R. Racho &
Armilyn A. Racho for themselves and on behalf of their minor child Gabriel Racho,
Mindy M. Juatas and on behalf of her minor children Elijah Gerald Juatas and Elian
Gabriel Juatas, Salvacion M. Monteiro, Emily R. Laws, Joseph R . Laws & Katrina R.
Laws, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON. ENRIQUE T. ONA,
Secretary, Department of Health, HON. ARMIN A. LUISTRO, Secretary, Department
of Education, Culture and Sports, HON. CORAZON SOLIMAN, Secretary, Department
of Social Welfare and Development, HON. MANUELA. ROXAS II, Secretary,
Department of Interior and Local Government, HON. FLORENCIO B. ABAD,
Secretary, Department of Budget and Management, HON. ARSENIO M. BALISACAN,
Socio-Economic Planning Secretary and NEDA Director-General, THE PHILIPPINE
COMMISSION ON WOMEN, represented by its Chairperson, Remedios lgnacio-
Rikken, THE PHILIPPINE HEALTH INSURANCE CORPORATION, represented by its
President Eduardo Banzon, THE LEAGUE OF PROVINCES OF THE PHILIPPINES,
represented by its President Alfonso Umali, THE LEAGUE OF CITIES OF THE
PHILIPPINES, represented by its President Oscar Rodriguez, and THE LEAGUE OF
MUNICIPALITIES OF THE PHILIPPINES, represented by its President Donato
Marcos, Respondents.
x---------------------------------x
G.R. No. 204957
TASK FORCE FOR FAMILY AND LIFE VISAYAS, INC. and VALERIANO S. AVILA,
Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary; HON. FLORENCIO B. ABAD,
Secretary, Department of Budget and Management; HON. ENRIQUE T. ONA,
Secretary, Department of Education; and HON. MANUELA. ROXAS II, Secretary,
Department of Interior and Local Government, Respondents.
x---------------------------------x
G.R. No. 204988
SERVE LIFE CAGAYAN DE ORO CITY, INC., represented by Dr. Nestor B. Lumicao,
M.D., as President and in his personal capacity, ROSEVALE FOUNDATION INC.,
represented by Dr. Rodrigo M. Alenton, M.D., as member of the school board and in
his personal capacity, ROSEMARIE R. ALENTON, IMELDA G. IBARRA, CPA,
LOVENIAP. NACES, Phd., ANTHONY G. NAGAC, EARL ANTHONY C. GAMBE and
MARLON I. YAP, Petitioners,
vs.
OFFICE OF THE PRESIDENT, SENATE OF THE PHILIPPINES, HOUSE OF
REPRESENTATIVES, HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON.
FLORENCIO B. ABAD, Secretary, Department of Budget and Management; HON.
ENRIQUE T. ONA, Secretary, Department of Health; HON. ARMIN A. LUISTRO,
Secretary, Department of Education and HON. MANUELA. ROXAS II, Secretary,
Department of Interior and Local Government, Respondents.
x---------------------------------x
G.R. No. 205003
123
EXPEDITO A. BUGARIN, JR., Petitioner,
vs.
OFFICE OF THE PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES, HON. SENATE
PRESIDENT, HON. SPEAKER OF THE HOUSE OF REPRESENTATIVES and HON.
SOLICITOR GENERAL, Respondents.
x---------------------------------x
G.R. No. 205043
EDUARDO B. OLAGUER and THE CATHOLIC XYBRSPACE APOSTOLATE OF THE
PHILIPPINES, Petitioners,
vs.
DOH SECRETARY ENRIQUE T. ONA, FDA DIRECTOR SUZETTE H. LAZO, DBM
SECRETARY FLORENCIO B. ABAD, DILG SECRETARY MANUELA. ROXAS II, DECS
SECRETARY ARMIN A. LUISTRO, Respondents.
x---------------------------------x
G.R. No. 205138
PHILIPPINE ALLIANCE OF XSEMINARIANS, INC. (PAX), herein represented by its
National President, Atty. Ricardo M . Ribo, and in his own behalf, Atty. Lino E.A.
Dumas, Romeo B. Almonte, Osmundo C. Orlanes, Arsenio Z. Menor, Samuel J. Yap,
Jaime F. Mateo, Rolly Siguan, Dante E. Magdangal, Michael Eugenio O. Plana,
Bienvenido C. Miguel, Jr., Landrito M. Diokno and Baldomero Falcone, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON. FLORENCIO B. ABAD,
Secretary, Department of Budget and Management, HON. ENRIQUE T. ONA,
Secretary, Department of Health, HON. ARMIN A. LUISTRO, Secretary, Department
of Education, HON. MANUELA. ROXAS II, Secretary, Department of Interior and
Local Government, HON. CORAZON J. SOLIMAN, Secretary, Department of Social
Welfare and Development, HON. ARSENIO BALISACAN, Director-General, National
Economic and Development Authority, HON. SUZETTE H. LAZO, Director-General,
Food and Drugs Administration, THE BOARD OF DIRECTORS, Philippine Health
Insurance Corporation, and THE BOARD OF COMMISSIONERS, Philippine
Commission on Women, Respondents.
x---------------------------------x
G.R. No. 205478
REYNALDO J. ECHAVEZ, M.D., JACQUELINE H. KING, M.D., CYNTHIA T. DOMINGO,
M.D., AND JOSEPHINE MILLADO-LUMITAO, M.D., collectively known as Doctors For
Life, and ANTHONY PEREZ, MICHAEL ANTHONY G. MAPA, CARLOS ANTONIO PALAD,
WILFREDO JOSE, CLAIRE NAVARRO, ANNA COSIO, and GABRIEL DY LIACCO
collectively known as Filipinos For Life, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary; HON. FLORENCIO B. ABAD,
Secretary of the Department of Budget and Management; HON. ENRIQUE T. ONA,
Secretary of the Department of Health; HON. ARMIN A. LUISTRO, Secretary of the
Department of Education; and HON. MANUELA. ROXAS II, Secretary of the
Department of Interior and Local Government, Respondents.
x---------------------------------x
G.R. No. 205491
SPOUSES FRANCISCO S. TATAD AND MARIA FENNY C. TATAD & ALA F. PAGUIA, for
themselves, their Posterity, and the rest of Filipino posterity, Petitioners,
vs.
OFFICE OF THE PRESIDENT of the Republic of the Philippines, Respondent.
x---------------------------------x
G.R. No. 205720
PRO-LIFE PHILIPPINES FOUNDATION, Inc., represented by Loma Melegrito, as
Executive Director, and in her personal capacity, JOSELYN B. BASILIO, ROBERT Z.
CORTES, ARIEL A. CRISOSTOMO, JEREMY I. GATDULA, CRISTINA A. MONTES, RAUL
ANTONIO A. NIDOY, WINSTON CONRAD B. PADOJINOG, RUFINO L. POLICARPIO III,
Petitioners,
vs.
OFFICE OF THE PRESIDENT, SENATE OF THE PHILIPPINES, HOUSE OF
REPRESENTATIVES, HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON.
FLORENCIO B. ABAD, Secretary, Department of Budget and Management, HON.
ENRIQUE T. ONA, Secretary, Department of Health, HON. ARMIN A. LUISTRO,
Secretary, Department of Education and HON. MANUEL A. ROXAS II, Secretary,
Department of Interior and Local Government, Respondents.
x---------------------------------x
G.R. No. 206355
MILLENNIUM SAINT FOUNDATION, INC., ATTY. RAMON PEDROSA, ATTY. CITA
BORROMEO-GARCIA, STELLAACEDERA, ATTY. BERTENI CATALUNA CAUSING,
Petitioners,
vs.
124
OFFICE OF THE PRESIDENT, OFFICE OF THE EXECUTIVE SECRETARY, DEPARTMENT
OF HEALTH, DEPARTMENT OF EDUCATION, Respondents.
x---------------------------------x
G.R. No. 207111
JOHN WALTER B. JUAT, MARY M. IMBONG, ANTHONY VICTORIO B. LUMICAO,
JOSEPH MARTIN Q. VERDEJO, ANTONIA EMMA R. ROXAS and LOTA LAT-GUERRERO,
Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON. FLORENCIO ABAD,
Secretary, Department of Budget and Management, HON. ENRIQUE T. ONA,
Secretary, Department of Health, HON. ARMIN A. LUISTRO, Secretary, Department
of Education, Culture and Sports and HON. MANUEL A. ROXAS II, Secretary,
Department of Interior and Local Government, Respondents.
x---------------------------------x
G.R. No. 207172
COUPLES FOR CHRIST FOUNDATION, INC., SPOUSES JUAN CARLOS ARTADI
SARMIENTO AND FRANCESCA ISABELLE BESINGA-SARMIENTO, AND SPOUSES LUIS
FRANCIS A. RODRIGO, JR. and DEBORAH MARIE VERONICA N. RODRIGO, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON. FLORENCIO B. ABAD,
Secretary, Department of Budget and Management, HON. ENRIQUE T. ONA,
Secretary, Department of Health, HON. ARMIN A. LUISTRO, Secretary, Department
of Education, Culture and Sports and HON. MANUELA. ROXAS II, Secretary,
Department of Interior and Local Government, Respondents.
x---------------------------------x
G.R. No. 207563
ALMARIM CENTI TILLAH and ABDULHUSSEIN M. KASHIM, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON. ENRIQUE T. ONA,
Secretary of the Department of Health, and HON. ARMIN A. LUISTRO,Secretary of
the Department of Budget and Management, Respondents.
DECISION
MENDOZA, J.:
Freedom of religion was accorded preferred status by the framers of our fundamental law.
And this Court has consistently affirmed this preferred status, well aware that it is "designed
to protect the broadest possible liberty of conscience, to allow each man to believe as his
conscience directs, to profess his beliefs , and to live as he believes he ought to live, consistent
with the liberty of others and with the common good."1
To this day, poverty is still a major stumbling block to the nation's emergence as a developed
country, leaving our people beleaguered in a state of hunger, illiteracy and unemployment.
While governmental policies have been geared towards the revitalization of the economy, the
bludgeoning dearth in social services remains to be a problem that concerns not only the
poor, but every member of society. The government continues to tread on a trying path to
the realization of its very purpose, that is, the general welfare of the Filipino people and the
development of the country as a whole. The legislative branch, as the main facet of a
representative government, endeavors to enact laws and policies that aim to remedy looming
societal woes, while the executive is closed set to fully implement these measures and bring
concrete and substantial solutions within the reach of Juan dela Cruz. Seemingly distant is
the judicial branch, oftentimes regarded as an inert governmental body that merely casts its
watchful eyes on clashing stakeholders until it is called upon to adjudicate. Passive, yet
reflexive when called into action, the Judiciary then willingly embarks on its solemn duty to
interpret legislation vis-a-vis the most vital and enduring principle that holds Philippine society
together - the supremacy of the Philippine Constitution.
Nothing has polarized the nation more in recent years than the issues of population growth
control, abortion and contraception. As in every democratic society, diametrically opposed
views on the subjects and their perceived consequences freely circulate in various media.
From television debates2 to sticker campaigns,3 from rallies by socio-political activists to
mass gatherings organized by members of the clergy4 - the clash between the seemingly
antithetical ideologies of the religious conservatives and progressive liberals has caused a
deep division in every level of the society. Despite calls to withhold support thereto, however,
Republic Act (R.A.) No. 10354, otherwise known as the Responsible Parenthood and
Reproductive Health Act of 2012 (RH Law), was enacted by Congress on December 21, 2012.
Shortly after the President placed his imprimatur on the said law, challengers from various
sectors of society came knocking on the doors of the Court, beckoning it to wield the sword
that strikes down constitutional disobedience. Aware of the profound and lasting impact that
its decision may produce, the Court now faces the iuris controversy, as presented in fourteen
(14) petitions and two (2) petitions- in-intervention, to wit:
(1) Petition for Certiorari and Prohibition,5 filed by spouses Attys. James M. Imbong
and Lovely Ann C. Imbong, in their personal capacities as citizens, lawyers and
taxpayers and on behalf of their minor children; and the Magnificat Child Leaming
Center, Inc., a domestic, privately-owned educational institution (Jmbong);
125
(2) Petition for Prohibition,6 filed by the Alliance for the Family Foundation Philippines,
Inc., through its president, Atty. Maria Concepcion S. Noche7 and several others8 in
their personal capacities as citizens and on behalf of the generations unborn (ALFI);
(3) Petition for Certiorari,9 filed by the Task Force for Family and Life Visayas, Inc.,
and Valeriano S. Avila, in their capacities as citizens and taxpayers (Task Force
Family);
(4) Petition for Certiorari and Prohibition,10 filed by Serve Life Cagayan De Oro City,
Inc.,11 Rosevale Foundation, Inc.,12 a domestic, privately-owned educational
institution, and several others,13 in their capacities as citizens (Serve Life);
(5) Petition,14 filed by Expedito A. Bugarin, Jr. in his capacity as a citizen (Bugarin);
(6) Petition for Certiorari and Prohibition,15 filed by Eduardo Olaguer and the Catholic
Xybrspace Apostolate of the Philippines,16 in their capacities as a citizens and
taxpayers (Olaguer);
(7) Petition for Certiorari and Prohibition,17 filed by the Philippine Alliance of
Xseminarians Inc.,18 and several others19 in their capacities as citizens and taxpayers
(PAX);
(8) Petition,20 filed by Reynaldo J. Echavez, M.D. and several others,21 in their
capacities as citizens and taxpayers (Echavez);
(9) Petition for Certiorari and Prohibition,22 filed by spouses Francisco and Maria Fenny
C. Tatad and Atty. Alan F. Paguia, in their capacities as citizens, taxpayers and on
behalf of those yet unborn. Atty. Alan F. Paguia is also proceeding in his capacity as a
member of the Bar (Tatad);
(10) Petition for Certiorari and Prohibition,23 filed by Pro-Life Philippines Foundation
Inc.24 and several others,25 in their capacities as citizens and taxpayers and on behalf
of its associates who are members of the Bar (Pro-Life);
(11) Petition for Prohibition,26 filed by Millennium Saint Foundation, Inc.,27 Attys.
Ramon Pedrosa, Cita Borromeo-Garcia, Stella Acedera, and Berteni Catalufia Causing,
in their capacities as citizens, taxpayers and members of the Bar (MSF);
(12) Petition for Certiorari and Prohibition,28 filed by John Walter B. Juat and several
others,29 in their capacities as citizens (Juat) ;
(13) Petition for Certiorari and Prohibition,30 filed by Couples for Christ Foundation,
Inc. and several others,31 in their capacities as citizens (CFC);
(14) Petition for Prohibition32 filed by Almarim Centi Tillah and Abdulhussein M.
Kashim in their capacities as citizens and taxpayers (Tillah); and
(15) Petition-In-Intervention,33 filed by Atty. Samson S. Alcantara in his capacity as
a citizen and a taxpayer (Alcantara); and
(16) Petition-In-Intervention,34 filed by Buhay Hayaang Yumabong (B UHAY) , an
accredited political party.
A perusal of the foregoing petitions shows that the petitioners are assailing the
constitutionality of RH Law on the following GROUNDS:
• The RH Law violates the right to life of the unborn. According to the petitioners,
notwithstanding its declared policy against abortion, the implementation of the RH Law
would authorize the purchase of hormonal contraceptives, intra-uterine devices and
injectables which are abortives, in violation of Section 12, Article II of the Constitution
which guarantees protection of both the life of the mother and the life of the unborn
from conception.35
• The RH Law violates the right to health and the right to protection against hazardous
products. The petitioners posit that the RH Law provides universal access to
contraceptives which are hazardous to one's health, as it causes cancer and other
health problems.36
• The RH Law violates the right to religious freedom. The petitioners contend that the
RH Law violates the constitutional guarantee respecting religion as it authorizes the
use of public funds for the procurement of contraceptives. For the petitioners, the use
of public funds for purposes that are believed to be contrary to their beliefs is included
in the constitutional mandate ensuring religious freedom.37
It is also contended that the RH Law threatens conscientious objectors of criminal prosecution,
imprisonment and other forms of punishment, as it compels medical practitioners 1] to refer
patients who seek advice on reproductive health programs to other doctors; and 2] to provide
full and correct information on reproductive health programs and service, although it is
against their religious beliefs and convictions.38
In this connection, Section 5 .23 of the Implementing Rules and Regulations of the RH Law
(RH-IRR),39 provides that skilled health professionals who are public officers such as, but not
limited to, Provincial, City, or Municipal Health Officers, medical officers, medical specialists,
rural health physicians, hospital staff nurses, public health nurses, or rural health midwives,
who are specifically charged with the duty to implement these Rules, cannot be considered
as conscientious objectors.40
126
It is also argued that the RH Law providing for the formulation of mandatory sex education in
schools should not be allowed as it is an affront to their religious beliefs.41
While the petit10ners recognize that the guarantee of religious freedom is not absolute, they
argue that the RH Law fails to satisfy the "clear and present danger test" and the "compelling
state interest test" to justify the regulation of the right to free exercise of religion and the
right to free speech.42
• The RH Law violates the constitutional provision on involuntary servitude. According
to the petitioners, the RH Law subjects medical practitioners to involuntary servitude
because, to be accredited under the PhilHealth program, they are compelled to provide
forty-eight (48) hours of pro bona services for indigent women, under threat of
criminal prosecution, imprisonment and other forms of punishment.43
The petitioners explain that since a majority of patients are covered by PhilHealth, a medical
practitioner would effectively be forced to render reproductive health services since the lack
of PhilHealth accreditation would mean that the majority of the public would no longer be able
to avail of the practitioners services.44
• The RH Law violates the right to equal protection of the law. It is claimed that the
RH Law discriminates against the poor as it makes them the primary target of the
government program that promotes contraceptive use. The petitioners argue that,
rather than promoting reproductive health among the poor, the RH Law seeks to
introduce contraceptives that would effectively reduce the number of the poor.45
• The RH Law is "void-for-vagueness" in violation of the due process clause of the
Constitution. In imposing the penalty of imprisonment and/or fine for "any violation,"
it is vague because it does not define the type of conduct to be treated as "violation"
of the RH Law.46
In this connection, it is claimed that "Section 7 of the RH Law violates the right to due process
by removing from them (the people) the right to manage their own affairs and to decide what
kind of health facility they shall be and what kind of services they shall offer."47 It ignores
the management prerogative inherent in corporations for employers to conduct their affairs
in accordance with their own discretion and judgment.
• The RH Law violates the right to free speech. To compel a person to explain a full
range of family planning methods is plainly to curtail his right to expound only his own
preferred way of family planning. The petitioners note that although exemption is
granted to institutions owned and operated by religious groups, they are still forced to
refer their patients to another healthcare facility willing to perform the service or
procedure.48
• The RH Law intrudes into the zone of privacy of one's family protected by the
Constitution. It is contended that the RH Law providing for mandatory reproductive
health education intrudes upon their constitutional right to raise their children in
accordance with their beliefs.49
It is claimed that, by giving absolute authority to the person who will undergo reproductive
health procedure, the RH Law forsakes any real dialogue between the spouses and impedes
the right of spouses to mutually decide on matters pertaining to the overall well-being of their
family. In the same breath, it is also claimed that the parents of a child who has suffered a
miscarriage are deprived of parental authority to determine whether their child should use
contraceptives.50
• The RH Law violates the constitutional principle of non-delegation of legislative
authority. The petitioners question the delegation by Congress to the FDA of the power
to determine whether a product is non-abortifacient and to be included in the
Emergency Drugs List (EDL).51
• The RH Law violates the one subject/one bill rule provision under Section 26( 1 ),
Article VI of the Constitution.52
• The RH Law violates Natural Law.53
• The RH Law violates the principle of Autonomy of Local Government Units (LGUs)
and the Autonomous Region of Muslim Mindanao {ARMM). It is contended that the RH
Law, providing for reproductive health measures at the local government level and the
ARMM, infringes upon the powers devolved to LGUs and the ARMM under the Local
Government Code and R.A . No. 9054.54
Various parties also sought and were granted leave to file their respective comments-in-
intervention in defense of the constitutionality of the RH Law. Aside from the Office of the
Solicitor General (OSG) which commented on the petitions in behalf of the respondents,55
Congressman Edcel C. Lagman,56 former officials of the Department of Health Dr. Esperanza
I. Cabral, Jamie Galvez-Tan, and Dr. Alberto G. Romualdez,57 the Filipino Catholic Voices for
Reproductive Health (C4RH),58 Ana Theresa "Risa" Hontiveros,59 and Atty. Joan De
Venecia60 also filed their respective Comments-in-Intervention in conjunction with several
others. On June 4, 2013, Senator Pia Juliana S. Cayetano was also granted leave to
intervene.61
The respondents, aside from traversing the substantive arguments of the petitioners, pray for
the dismissal of the petitions for the principal reasons that 1] there is no actual case or
controversy and, therefore, the issues are not yet ripe for judicial determination.; 2] some
petitioners lack standing to question the RH Law; and 3] the petitions are essentially petitions
for declaratory relief over which the Court has no original jurisdiction.
127
Meanwhile, on March 15, 2013, the RH-IRR for the enforcement of the assailed legislation
took effect.
On March 19, 2013, after considering the issues and arguments raised, the Court issued the
Status Quo Ante Order (SQAO), enjoining the effects and implementation of the assailed
legislation for a period of one hundred and twenty (120) days, or until July 17, 2013.62
On May 30, 2013, the Court held a preliminary conference with the counsels of the parties to
determine and/or identify the pertinent issues raised by the parties and the sequence by
which these issues were to be discussed in the oral arguments. On July 9 and 23, 2013, and
on August 6, 13, and 27, 2013, the cases were heard on oral argument. On July 16, 2013,
the SQAO was ordered extended until further orders of the Court.63
Thereafter, the Court directed the parties to submit their respective memoranda within sixty
(60) days and, at the same time posed several questions for their clarification on some
contentions of the parties.64
The Status Quo Ante
(Population, Contraceptive and Reproductive Health Laws
Prior to the RH Law
Long before the incipience of the RH Law, the country has allowed the sale, dispensation and
distribution of contraceptive drugs and devices. As far back as June 18, 1966, the country
enacted R.A. No. 4729 entitled "An Act to Regu,late the Sale, Dispensation, and/or
Distribution of Contraceptive Drugs and Devices." Although contraceptive drugs and devices
were allowed, they could not be sold, dispensed or distributed "unless such sale, dispensation
and distribution is by a duly licensed drug store or pharmaceutical company and with the
prescription of a qualified medical practitioner."65
In addition, R.A. No. 5921,66 approved on June 21, 1969, contained provisions relative to
"dispensing of abortifacients or anti-conceptional substances and devices." Under Section 37
thereof, it was provided that "no drug or chemical product or device capable of provoking
abortion or preventing conception as classified by the Food and Drug Administration shall be
delivered or sold to any person without a proper prescription by a duly licensed physician."
On December 11, 1967, the Philippines, adhering to the UN Declaration on Population, which
recognized that the population problem should be considered as the principal element for
long-term economic development, enacted measures that promoted male vasectomy and
tubal ligation to mitigate population growth.67 Among these measures included R.A. No.
6365, approved on August 16, 1971, entitled "An Act Establishing a National Policy on
Population, Creating the Commission on Population and for Other Purposes. " The law
envisioned that "family planning will be made part of a broad educational program; safe and
effective means will be provided to couples desiring to space or limit family size; mortality
and morbidity rates will be further reduced."
To further strengthen R.A. No. 6365, then President Ferdinand E . Marcos issued Presidential
Decree. (P.D.) No. 79,68 dated December 8, 1972, which, among others, made "family
planning a part of a broad educational program," provided "family planning services as a part
of over-all health care," and made "available all acceptable methods of contraception, except
abortion, to all Filipino citizens desirous of spacing, limiting or preventing pregnancies."
Through the years, however, the use of contraceptives and family planning methods evolved
from being a component of demographic management, to one centered on the promotion of
public health, particularly, reproductive health.69 Under that policy, the country gave priority
to one's right to freely choose the method of family planning to be adopted, in conformity
with its adherence to the commitments made in the International Conference on Population
and Development.70 Thus, on August 14, 2009, the country enacted R.A. No. 9710 or "The
Magna Carta for Women, " which, among others, mandated the State to provide for
comprehensive health services and programs for women, including family planning and sex
education.71
The RH Law
Despite the foregoing legislative measures, the population of the country kept on galloping at
an uncontrollable pace. From a paltry number of just over 27 million Filipinos in 1960, the
population of the country reached over 76 million in the year 2000 and over 92 million in
2010.72 The executive and the legislative, thus, felt that the measures were still not
adequate. To rein in the problem, the RH Law was enacted to provide Filipinos, especially the
poor and the marginalized, access and information to the full range of modem family planning
methods, and to ensure that its objective to provide for the peoples' right to reproductive
health be achieved. To make it more effective, the RH Law made it mandatory for health
providers to provide information on the full range of modem family planning methods, supplies
and services, and for schools to provide reproductive health education. To put teeth to it, the
RH Law criminalizes certain acts of refusals to carry out its mandates.
Stated differently, the RH Law is an enhancement measure to fortify and make effective the
current laws on contraception, women's health and population control.
Prayer of the Petitioners - Maintain the Status Quo
The petitioners are one in praying that the entire RH Law be declared unconstitutional.
Petitioner ALFI, in particular, argues that the government sponsored contraception program,
the very essence of the RH Law, violates the right to health of women and the sanctity of life,
which the State is mandated to protect and promote. Thus, ALFI prays that "the status quo
ante - the situation prior to the passage of the RH Law - must be maintained."73 It explains:
128
x x x. The instant Petition does not question contraception and contraceptives per se. As 6] Due Process
provided under Republic Act No. 5921 and Republic Act No. 4729, the sale and distribution of
contraceptives are prohibited unless dispensed by a prescription duly licensed by a physician. 7] Equal Protection
What the Petitioners find deplorable and repugnant under the RH Law is the role that the
State and its agencies - the entire bureaucracy, from the cabinet secretaries down to the 8] Involuntary Servitude
barangay officials in the remotest areas of the country - is made to play in the implementation
of the contraception program to the fullest extent possible using taxpayers' money. The State
9] Delegation of Authority to the FDA
then will be the funder and provider of all forms of family planning methods and the
implementer of the program by ensuring the widespread dissemination of, and universal
access to, a full range of family planning methods, devices and supplies.74 10] Autonomy of Local Govemments/ARMM

ISSUES DISCUSSION

After a scrutiny of the various arguments and contentions of the parties, the Court has Before delving into the constitutionality of the RH Law and its implementing rules, it behooves
synthesized and refined them to the following principal issues: the Court to resolve some procedural impediments.

I. PROCEDURAL: Whether the Court may exercise its power of judicial review over the I. PROCEDURAL ISSUE: Whether the Court can exercise its power of judicial review over the
controversy. controversy.

1] Power of Judicial Review The Power of Judicial Review

2] Actual Case or Controversy In its attempt to persuade the Court to stay its judicial hand, the OSG asserts that it should
submit to the legislative and political wisdom of Congress and respect the compromises made
in the crafting of the RH Law, it being "a product of a majoritarian democratic process"75 and
3] Facial Challenge
"characterized by an inordinate amount of transparency."76 The OSG posits that the authority
of the Court to review social legislation like the RH Law by certiorari is "weak," since the
4] Locus Standi Constitution vests the discretion to implement the constitutional policies and positive norms
with the political departments, in particular, with Congress.77 It further asserts that in view
5] Declaratory Relief of the Court's ruling in Southern Hemisphere v. Anti-Terrorism Council,78 the remedies of
certiorari and prohibition utilized by the petitioners are improper to assail the validity of the
6] One Subject/One Title Rule acts of the legislature.79

II. SUBSTANTIVE: Whether the RH law is unconstitutional: Moreover, the OSG submits that as an "as applied challenge," it cannot prosper considering
that the assailed law has yet to be enforced and applied to the petitioners, and that the
1] Right to Life government has yet to distribute reproductive health devices that are abortive. It claims that
the RH Law cannot be challenged "on its face" as it is not a speech-regulating measure.80
2] Right to Health
In many cases involving the determination of the constitutionality of the actions of the
3] Freedom of Religion and the Right to Free Speech Executive and the Legislature, it is often sought that the Court temper its exercise of judicial
power and accord due respect to the wisdom of its co-equal branch on the basis of the
principle of separation of powers. To be clear, the separation of powers is a fundamental
4] The Family
principle in our system of government, which obtains not through express provision but by
actual division in our Constitution. Each department of the government has exclusive
5] Freedom of Expression and Academic Freedom cognizance of matters within its jurisdiction and is supreme within its own sphere.81

129
Thus, the 1987 Constitution provides that: (a) the legislative power shall be vested in the
Congress of the Philippines;82 (b) the executive power shall be vested in the President of the
Philippines;83 and (c) the judicial power shall be vested in one Supreme Court and in such
lower courts as may be established by law.84 The Constitution has truly blocked out with deft
strokes and in bold lines, the allotment of powers among the three branches of government.85
In its relationship with its co-equals, the Judiciary recognizes the doctrine of separation of
powers which imposes upon the courts proper restraint, born of the nature of their functions
and of their respect for the other branches of government, in striking down the acts of the
Executive or the Legislature as unconstitutional. Verily, the policy is a harmonious blend of
courtesy and caution.86
It has also long been observed, however, that in times of social disquietude or political
instability, the great landmarks of the Constitution are apt to be forgotten or marred, if not
entirely obliterated.87 In order to address this, the Constitution impresses upon the Court to
respect the acts performed by a co-equal branch done within its sphere of competence and
authority, but at the same time, allows it to cross the line of separation - but only at a very
limited and specific point - to determine whether the acts of the executive and the legislative
branches are null because they were undertaken with grave abuse of discretion.88 Thus, while
the Court may not pass upon questions of wisdom, justice or expediency of the RH Law, it
may do so where an attendant unconstitutionality or grave abuse of discretion results.89 The
Court must demonstrate its unflinching commitment to protect those cherished rights and
principles embodied in the Constitution.
In this connection, it bears adding that while the scope of judicial power of review may be
limited, the Constitution makes no distinction as to the kind of legislation that may be subject
to judicial scrutiny, be it in the form of social legislation or otherwise. The reason is simple
and goes back to the earlier point. The Court may pass upon the constitutionality of acts of
the legislative and the executive branches, since its duty is not to review their collective
wisdom but, rather, to make sure that they have acted in consonance with their respective
authorities and rights as mandated of them by the Constitution. If after said review, the Court
finds no constitutional violations of any sort, then, it has no more authority of proscribing the
actions under review.90 This is in line with Article VIII, Section 1 of the Constitution which
expressly provides:
Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts
as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part
of any branch or instrumentality of the Government. [Emphases supplied]
As far back as Tanada v. Angara,91 the Court has unequivocally declared that certiorari,
prohibition and mandamus are appropriate remedies to raise constitutional issues and to
review and/or prohibit/nullify, when proper, acts of legislative and executive officials, as there
is no other plain, speedy or adequate remedy in the ordinary course of law. This ruling was
later on applied in Macalintal v. COMELEC,92 Aldaba v. COMELEC,93 Magallona v. Ermita,94
and countless others. In Tanada, the Court wrote:
In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a justiciable controversy. Where an action of the
legislative branch is seriously alleged to have infringed the Constitution, it becomes not only
the right but in fact the duty of the judiciary to settle the dispute. "The question thus posed
is judicial rather than political. The duty (to adjudicate) remains to assure that the supremacy
of the Constitution is upheld. " Once a "controversy as to the application or interpretation of
constitutional provision is raised before this Court (as in the instant case), it becomes a legal
issue which the Court is bound by constitutional mandate to decide. [Emphasis supplied]
In the scholarly estimation of former Supreme Court Justice Florentino Feliciano, "judicial
review is essential for the maintenance and enforcement of the separation of powers and the
balancing of powers among the three great departments of government through the definition
and maintenance of the boundaries of authority and control between them. To him, judicial
review is the chief, indeed the only, medium of participation - or instrument of intervention -
of the judiciary in that balancing operation.95
Lest it be misunderstood, it bears emphasizing that the Court does not have the unbridled
authority to rule on just any and every claim of constitutional violation. Jurisprudence is
replete with the rule that the power of judicial review is limited by four exacting requisites,
viz : (a) there must be an actual case or controversy; (b) the petitioners must possess locus
standi; (c) the question of constitutionality must be raised at the earliest opportunity; and
(d) the issue of constitutionality must be the lis mota of the case.96
Actual Case or Controversy
Proponents of the RH Law submit that the subj ect petitions do not present any actual case
or controversy because the RH Law has yet to be implemented.97 They claim that the
questions raised by the petitions are not yet concrete and ripe for adjudication since no one
has been charged with violating any of its provisions and that there is no showing that any of
the petitioners' rights has been adversely affected by its operation.98 In short, it is contended
that judicial review of the RH Law is premature.
An actual case or controversy means an existing case or controversy that is appropriate or
ripe for determination, not conjectural or anticipatory, lest the decision of the court would
amount to an advisory opinion.99 The rule is that courts do not sit to adjudicate mere
academic questions to satisfy scholarly interest, however intellectually challenging. The
controversy must be justiciable-definite and concrete, touching on the legal relations of
130
parties having adverse legal interests. In other words, the pleadings must show an active
antagonistic assertion of a legal right, on the one hand, and a denial thereof, on the other;
that is, it must concern a real, tangible and not merely a theoretical question or issue. There
ought to be an actual and substantial controversy admitting of specific relief through a decree
conclusive in nature, as distinguished from an opinion advising what the law would be upon
a hypothetical state of facts.100
Corollary to the requirement of an actual case or controversy is the requirement of
ripeness.101 A question is ripe for adjudication when the act being challenged has had a
direct adverse effect on the individual challenging it. For a case to be considered ripe for
adjudication, it is a prerequisite that something has then been accomplished or performed by
either branch before a court may come into the picture, and the petitioner must allege the
existence of an immediate or threatened injury to himself as a result of the challenged action.
He must show that he has sustained or is immediately in danger of sustaining some direct
injury as a result of the act complained of102
In The Province of North Cotabato v. The Government of the Republic of the Philippines,103
where the constitutionality of an unimplemented Memorandum of Agreement on the Ancestral
Domain (MOA-AD) was put in question, it was argued that the Court has no authority to pass
upon the issues raised as there was yet no concrete act performed that could possibly violate
the petitioners' and the intervenors' rights. Citing precedents, the Court ruled that the fact of
the law or act in question being not yet effective does not negate ripeness. Concrete acts
under a law are not necessary to render the controversy ripe. Even a singular violation of the
Constitution and/or the law is enough to awaken judicial duty.
In this case, the Court is of the view that an actual case or controversy exists and that the
same is ripe for judicial determination. Considering that the RH Law and its implementing
rules have already taken effect and that budgetary measures to carry out the law have already
been passed, it is evident that the subject petitions present a justiciable controversy. As
stated earlier, when an action of the legislative branch is seriously alleged to have infringed
the Constitution, it not only becomes a right, but also a duty of the Judiciary to settle the
dispute.104
Moreover, the petitioners have shown that the case is so because medical practitioners or
medical providers are in danger of being criminally prosecuted under the RH Law for vague
violations thereof, particularly public health officers who are threatened to be dismissed from
the service with forfeiture of retirement and other benefits. They must, at least, be heard on
the matter NOW.
Facial Challenge
The OSG also assails the propriety of the facial challenge lodged by the subject petitions,
contending that the RH Law cannot be challenged "on its face" as it is not a speech regulating
measure.105
The Court is not persuaded.
In United States (US) constitutional law, a facial challenge, also known as a First Amendment
Challenge, is one that is launched to assail the validity of statutes concerning not only
protected speech, but also all other rights in the First Amendment.106 These include religious
freedom, freedom of the press, and the right of the people to peaceably assemble, and to
petition the Government for a redress of grievances.107 After all, the fundamental right to
religious freedom, freedom of the press and peaceful assembly are but component rights of
the right to one's freedom of expression, as they are modes which one's thoughts are
externalized.
In this jurisdiction, the application of doctrines originating from the U.S. has been generally
maintained, albeit with some modifications. While this Court has withheld the application of
facial challenges to strictly penal statues,108 it has expanded its scope to cover statutes not
only regulating free speech, but also those involving religious freedom, and other fundamental
rights.109 The underlying reason for this modification is simple. For unlike its counterpart in
the U.S., this Court, under its expanded jurisdiction, is mandated by the Fundamental Law
not only to settle actual controversies involving rights which are legally demandable and
enforceable, but also to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government.110 Verily, the framers of Our Constitution envisioned a proactive Judiciary, ever
vigilant with its duty to maintain the supremacy of the Constitution.
Consequently, considering that the foregoing petitions have seriously alleged that the
constitutional human rights to life, speech and religion and other fundamental rights
mentioned above have been violated by the assailed legislation, the Court has authority to
take cognizance of these kindred petitions and to determine if the RH Law can indeed pass
constitutional scrutiny. To dismiss these petitions on the simple expedient that there exist no
actual case or controversy, would diminish this Court as a reactive branch of government,
acting only when the Fundamental Law has been transgressed, to the detriment of the Filipino
people.
Locus Standi
The OSG also attacks the legal personality of the petitioners to file their respective petitions.
It contends that the "as applied challenge" lodged by the petitioners cannot prosper as the
assailed law has yet to be enforced and applied against them,111 and the government has
yet to distribute reproductive health devices that are abortive.112
The petitioners, for their part, invariably invoke the "transcendental importance" doctrine and
their status as citizens and taxpayers in establishing the requisite locus standi.
Locus standi or legal standing is defined as a personal and substantial interest in a case such
that the party has sustained or will sustain direct injury as a result of the challenged
131
governmental act.113 It requires a personal stake in the outcome of the controversy as to
assure the concrete adverseness which sharpens the presentation of issues upon which the
court so largely depends for illumination of difficult constitutional questions.114
In relation to locus standi, the "as applied challenge" embodies the rule that one can challenge
the constitutionality of a statute only if he asserts a violation of his own rights. The rule
prohibits one from challenging the constitutionality of the statute grounded on a violation of
the rights of third persons not before the court. This rule is also known as the prohibition
against third-party standing.115
Transcendental Importance
Notwithstanding, the Court leans on the doctrine that "the rule on standing is a matter of
procedure, hence, can be relaxed for non-traditional plaintiffs like ordinary citizens, taxpayers,
and legislators when the public interest so requires, such as when the matter is of
transcendental importance, of overreaching significance to society, or of paramount public
interest."116
In Coconut Oil Refiners Association, Inc. v. Torres,117 the Court held that in cases of
paramount importance where serious constitutional questions are involved, the standing
requirement may be relaxed and a suit may be allowed to prosper even where there is no
direct injury to the party claiming the right of judicial review. In the first Emergency Powers
Cases,118 ordinary citizens and taxpayers were allowed to question the constitutionality of
several executive orders although they had only an indirect and general interest shared in
common with the public.
With these said, even if the constitutionality of the RH Law may not be assailed through an
"as-applied challenge, still, the Court has time and again acted liberally on the locus s tandi
requirement. It has accorded certain individuals standing to sue, not otherwise directly injured
or with material interest affected by a Government act, provided a constitutional issue of
transcendental importance is invoked. The rule on locus standi is, after all, a procedural
technicality which the Court has, on more than one occasion, waived or relaxed, thus allowing
non-traditional plaintiffs, such as concerned citizens, taxpayers, voters or legislators, to sue
in the public interest, albeit they may not have been directly injured by the operation of a law
or any other government act. As held in Jaworski v. PAGCOR:119
Granting arguendo that the present action cannot be properly treated as a petition for
prohibition, the transcendental importance of the issues involved in this case warrants that
we set aside the technical defects and take primary jurisdiction over the petition at bar. One
cannot deny that the issues raised herein have potentially pervasive influence on the social
and moral well being of this nation, specially the youth; hence, their proper and just
determination is an imperative need. This is in accordance with the well-entrenched principle
that rules of procedure are not inflexible tools designed to hinder or delay, but to facilitate
and promote the administration of justice. Their strict and rigid application, which would result
in technicalities that tend to frustrate, rather than promote substantial justice, must always
be eschewed. (Emphasis supplied)
In view of the seriousness, novelty and weight as precedents, not only to the public, but also
to the bench and bar, the issues raised must be resolved for the guidance of all. After all, the
RH Law drastically affects the constitutional provisions on the right to life and health, the
freedom of religion and expression and other constitutional rights. Mindful of all these and the
fact that the issues of contraception and reproductive health have already caused deep
division among a broad spectrum of society, the Court entertains no doubt that the petitions
raise issues of transcendental importance warranting immediate court adjudication. More
importantly, considering that it is the right to life of the mother and the unborn which is
primarily at issue, the Court need not wait for a life to be taken away before taking action.
The Court cannot, and should not, exercise judicial restraint at this time when rights enshrined
in the Constitution are being imperilled to be violated. To do so, when the life of either the
mother or her child is at stake, would lead to irreparable consequences.
Declaratory Relief
The respondents also assail the petitions because they are essentially petitions for declaratory
relief over which the Court has no original jurisdiction.120 Suffice it to state that most of the
petitions are praying for injunctive reliefs and so the Court would just consider them as
petitions for prohibition under Rule 65, over which it has original jurisdiction. Where the case
has far-reaching implications and prays for injunctive reliefs, the Court may consider them as
petitions for prohibition under Rule 65.121
One Subject-One Title
The petitioners also question the constitutionality of the RH Law, claiming that it violates
Section 26(1 ), Article VI of the Constitution,122 prescribing the one subject-one title rule.
According to them, being one for reproductive health with responsible parenthood, the
assailed legislation violates the constitutional standards of due process by concealing its true
intent - to act as a population control measure.123
To belittle the challenge, the respondents insist that the RH Law is not a birth or population
control measure,124 and that the concepts of "responsible parenthood" and "reproductive
health" are both interrelated as they are inseparable.125
Despite efforts to push the RH Law as a reproductive health law, the Court sees it as principally
a population control measure. The corpus of the RH Law is geared towards the reduction of
the country's population. While it claims to save lives and keep our women and children
healthy, it also promotes pregnancy-preventing products. As stated earlier, the RH Law
emphasizes the need to provide Filipinos, especially the poor and the marginalized, with
access to information on the full range of modem family planning products and methods.
132
These family planning methods, natural or modem, however, are clearly geared towards the
prevention of pregnancy.
For said reason, the manifest underlying objective of the RH Law is to reduce the number of
births in the country.
It cannot be denied that the measure also seeks to provide pre-natal and post-natal care as
well. A large portion of the law, however, covers the dissemination of information and
provisions on access to medically-safe, non-abortifacient, effective, legal, affordable, and
quality reproductive health care services, methods, devices, and supplies, which are all
intended to prevent pregnancy.
The Court, thus, agrees with the petitioners' contention that the whole idea of contraception
pervades the entire RH Law. It is, in fact, the central idea of the RH Law.126 Indeed, remove
the provisions that refer to contraception or are related to it and the RH Law loses its very
foundation.127 As earlier explained, "the other positive provisions such as skilled birth
attendance, maternal care including pre-and post-natal services, prevention and management
of reproductive tract infections including HIV/AIDS are already provided for in the Magna
Carta for Women."128
Be that as it may, the RH Law does not violate the one subject/one bill rule. In Benjamin E.
Cawaling, Jr. v. The Commission on Elections and Rep. Francis Joseph G Escudero, it was
written:
It is well-settled that the "one title-one subject" rule does not require the Congress to employ
in the title of the enactment language of such precision as to mirror, fully index or catalogue
all the contents and the minute details therein. The rule is sufficiently complied with if the
title is comprehensive enough as to include the general object which the statute seeks to
effect, and where, as here, the persons interested are informed of the nature, scope and
consequences of the proposed law and its operation. Moreover, this Court has invariably
adopted a liberal rather than technical construction of the rule "so as not to cripple or impede
legislation." [Emphases supplied]
In this case, a textual analysis of the various provisions of the law shows that both
"reproductive health" and "responsible parenthood" are interrelated and germane to the
overriding objective to control the population growth. As expressed in the first paragraph of
Section 2 of the RH Law:
SEC. 2. Declaration of Policy. - The State recognizes and guarantees the human rights of all
persons including their right to equality and nondiscrimination of these rights, the right to
sustainable human development, the right to health which includes reproductive health, the
right to education and information, and the right to choose and make decisions for themselves
in accordance with their religious convictions, ethics, cultural beliefs, and the demands of
responsible parenthood.
The one subject/one title rule expresses the principle that the title of a law must not be "so
uncertain that the average person reading it would not be informed of the purpose of the
enactment or put on inquiry as to its contents, or which is misleading, either in referring to
or indicating one subject where another or different one is really embraced in the act, or in
omitting any expression or indication of the real subject or scope of the act."129
Considering the close intimacy between "reproductive health" and "responsible parenthood"
which bears to the attainment of the goal of achieving "sustainable human development" as
stated under its terms, the Court finds no reason to believe that Congress intentionally sought
to deceive the public as to the contents of the assailed legislation.
II - SUBSTANTIVE ISSUES:
1-The Right to Life
Position of the Petitioners
The petitioners assail the RH Law because it violates the right to life and health of the unborn
child under Section 12, Article II of the Constitution. The assailed legislation allowing access
to abortifacients/abortives effectively sanctions abortion.130
According to the petitioners, despite its express terms prohibiting abortion, Section 4(a) of
the RH Law considers contraceptives that prevent the fertilized ovum to reach and be
implanted in the mother's womb as an abortifacient; thus, sanctioning contraceptives that
take effect after fertilization and prior to implantation, contrary to the intent of the Framers
of the Constitution to afford protection to the fertilized ovum which already has life.
They argue that even if Section 9 of the RH Law allows only "non-abortifacient" hormonal
contraceptives, intrauterine devices, injectables and other safe, legal, non-abortifacient and
effective family planning products and supplies, medical research shows that contraceptives
use results in abortion as they operate to kill the fertilized ovum which already has life.131
As it opposes the initiation of life, which is a fundamental human good, the petitioners assert
that the State sanction of contraceptive use contravenes natural law and is an affront to the
dignity of man.132
Finally, it is contended that since Section 9 of the RH Law requires the Food and Drug
Administration (FDA) to certify that the product or supply is not to be used as an abortifacient,
the assailed legislation effectively confirms that abortifacients are not prohibited. Also
considering that the FDA is not the agency that will actually supervise or administer the use
of these products and supplies to prospective patients, there is no way it can truthfully make
a certification that it shall not be used for abortifacient purposes.133
Position of the Respondents
133
For their part, the defenders of the RH Law point out that the intent of the Framers of the
Constitution was simply the prohibition of abortion. They contend that the RH Law does not
violate the Constitution since the said law emphasizes that only "non-abortifacient"
reproductive health care services, methods, devices products and supplies shall be made
accessible to the public.134
According to the OSG, Congress has made a legislative determination that contraceptives are
not abortifacients by enacting the RH Law. As the RH Law was enacted with due consideration
to various studies and consultations with the World Health Organization (WHO) and other
experts in the medical field, it is asserted that the Court afford deference and respect to such
a determination and pass judgment only when a particular drug or device is later on
determined as an abortive.135
For his part, respondent Lagman argues that the constitutional protection of one's right to life
is not violated considering that various studies of the WHO show that life begins from the
implantation of the fertilized ovum. Consequently, he argues that the RH Law is constitutional
since the law specifically provides that only contraceptives that do not prevent the
implantation of the fertilized ovum are allowed.136
The Court's Position
It is a universally accepted principle that every human being enjoys the right to life.137
Even if not formally established, the right to life, being grounded on natural law, is inherent
and, therefore, not a creation of, or dependent upon a particular law, custom, or belief. It
precedes and transcends any authority or the laws of men.
In this jurisdiction, the right to life is given more than ample protection. Section 1, Article III
of the Constitution provides:
Section 1. No person shall be deprived of life, liberty, or property without due process of law,
nor shall any person be denied the equal protection of the laws.
As expounded earlier, the use of contraceptives and family planning methods in the Philippines
is not of recent vintage. From the enactment of R.A. No. 4729, entitled "An Act To Regulate
The Sale, Dispensation, and/or Distribution of Contraceptive Drugs and Devices "on June 18,
1966, prescribing rules on contraceptive drugs and devices which prevent fertilization,138 to
the promotion of male vasectomy and tubal ligation,139 and the ratification of numerous
international agreements, the country has long recognized the need to promote population
control through the use of contraceptives in order to achieve long-term economic
development. Through the years, however, the use of contraceptives and other family
planning methods evolved from being a component of demographic management, to one
centered on the promotion of public health, particularly, reproductive health.140
This has resulted in the enactment of various measures promoting women's rights and health
and the overall promotion of the family's well-being. Thus, aside from R.A. No. 4729, R.A.
No. 6365 or "The Population Act of the Philippines" and R.A. No. 9710, otherwise known as
the "The Magna Carta of Women" were legislated. Notwithstanding this paradigm shift, the
Philippine national population program has always been grounded two cornerstone principles:
"principle of no-abortion" and the "principle of non-coercion."141 As will be discussed later,
these principles are not merely grounded on administrative policy, but rather, originates from
the constitutional protection expressly provided to afford protection to life and guarantee
religious freedom.
When Life Begins*
Majority of the Members of the Court are of the position that the question of when life begins
is a scientific and medical issue that should not be decided, at this stage, without proper
hearing and evidence. During the deliberation, however, it was agreed upon that the individual
members of the Court could express their own views on this matter.
In this regard, the ponente, is of the strong view that life begins at fertilization.
In answering the question of when life begins, focus should be made on the particular phrase
of Section 12 which reads:
Section 12. The State recognizes the sanctity of family life and shall protect and strengthen
the family as a basic autonomous social institution. It shall equally protect the life of the
mother and the life of the unborn from conception. The natural and primary right and duty of
parents in the rearing of the youth for civic efficiency and the development of moral character
shall receive the support of the Government.
Textually, the Constitution affords protection to the unborn from conception. This is
undisputable because before conception, there is no unborn to speak of. For said reason, it is
no surprise that the Constitution is mute as to any proscription prior to conception or when
life begins. The problem has arisen because, amazingly, there are quarters who have
conveniently disregarded the scientific fact that conception is reckoned from fertilization. They
are waving the view that life begins at implantation. Hence, the issue of when life begins.
In a nutshell, those opposing the RH Law contend that conception is synonymous with
"fertilization" of the female ovum by the male sperm.142 On the other side of the spectrum
are those who assert that conception refers to the "implantation" of the fertilized ovum in the
uterus.143
Plain and Legal Meaning
134
It is a canon in statutory construction that the words of the Constitution should be interpreted
in their plain and ordinary meaning. As held in the recent case of Chavez v. Judicial Bar
Council:144
One of the primary and basic rules in statutory construction is that where the words of a
statute are clear, plain, and free from ambiguity, it must be given its literal meaning and
applied without attempted interpretation. It is a well-settled principle of constitutional
construction that the language employed in the Constitution must be given their ordinary
meaning except where technical terms are employed. As much as possible, the words of the
Constitution should be understood in the sense they have in common use. What it says
according to the text of the provision to be construed compels acceptance and negates the
power of the courts to alter it, based on the postulate that the framers and the people mean
what they say. Verba legis non est recedendum - from the words of a statute there should be
no departure.
The raison d' etre for the rule is essentially two-fold: First, because it is assumed that the
words in which constitutional provisions are couched express the objective sought to be
attained; and second, because the Constitution is not primarily a lawyer's document but
essentially that of the people, in whose consciousness it should ever be present as an
important condition for the rule of law to prevail.
In conformity with the above principle, the traditional meaning of the word "conception"
which, as described and defined by all reliable and reputable sources, means that life begins
at fertilization.
Webster's Third New International Dictionary describes it as the act of becoming pregnant,
formation of a viable zygote; the fertilization that results in a new entity capable of developing
into a being like its parents.145
Black's Law Dictionary gives legal meaning to the term "conception" as the fecundation of the
female ovum by the male spermatozoon resulting in human life capable of survival and
maturation under normal conditions.146
Even in jurisprudence, an unborn child has already a legal personality. In Continental Steel
Manufacturing Corporation v. Hon. Accredited Voluntary Arbitrator Allan S. Montano,147 it
was written:
Life is not synonymous with civil personality. One need not acquire civil personality first before
he/she could die. Even a child inside the womb already has life. No less than the Constitution
recognizes the life of the unborn from conception, that the State must protect equally with
the life of the mother. If the unborn already has life, then the cessation thereof even prior to
the child being delivered, qualifies as death. [Emphases in the original]
In Gonzales v. Carhart,148 Justice Anthony Kennedy, writing for the US Supreme Court, said
that the State "has respect for human life at all stages in the pregnancy" and "a legitimate
and substantial interest in preserving and promoting fetal life." Invariably, in the decision, the
fetus was referred to, or cited, as a baby or a child.149
Intent of the Framers
Records of the Constitutional Convention also shed light on the intention of the Framers
regarding the term "conception" used in Section 12, Article II of the Constitution. From their
deliberations, it clearly refers to the moment of "fertilization." The records reflect the
following:
Rev. Rigos: In Section 9, page 3, there is a sentence which reads:
"The State shall equally protect the life of the mother and the life of the unborn from the
moment of conception."
When is the moment of conception?
xxx
Mr. Villegas: As I explained in the sponsorship speech, it is when the ovum is fertilized by the
sperm that there is human life. x x x.150
xxx
As to why conception is reckoned from fertilization and, as such, the beginning of human life,
it was explained:
Mr. Villegas: I propose to review this issue in a biological manner. The first question that
needs to be answered is: Is the fertilized ovum alive? Biologically categorically says yes, the
fertilized ovum is alive. First of all, like all living organisms, it takes in nutrients which it
processes by itself. It begins doing this upon fertilization. Secondly, as it takes in these
nutrients, it grows from within. Thirdly, it multiplies itself at a geometric rate in the continuous
process of cell division. All these processes are vital signs of life. Therefore, there is no
question that biologically the fertilized ovum has life.
The second question: Is it human? Genetics gives an equally categorical "yes." At the moment
of conception, the nuclei of the ovum and the sperm rupture. As this happens 23
chromosomes from the ovum combine with 23 chromosomes of the sperm to form a total of
46 chromosomes. A chromosome count of 46 is found only - and I repeat, only in human
cells. Therefore, the fertilized ovum is human.
135
Since these questions have been answered affirmatively, we must conclude that if the
fertilized ovum is both alive and human, then, as night follows day, it must be human life. Its
nature is human.151
Why the Constitution used the phrase "from the moment of conception" and not "from the
moment of fertilization" was not because of doubt when human life begins, but rather,
because:
Mr. Tingson: x x x x the phrase from the moment of conception" was described by us here
before with the scientific phrase "fertilized ovum" may be beyond the comprehension of some
people; we want to use the simpler phrase "from the moment of conception."152
Thus, in order to ensure that the fertilized ovum is given ample protection under the
Constitution, it was discussed:
Rev. Rigos: Yes, we think that the word "unborn" is sufficient for the purpose of writing a
Constitution, without specifying "from the moment of conception."
Mr. Davide: I would not subscribe to that particular view because according to the
Commissioner's own admission, he would leave it to Congress to define when life begins. So,
Congress can define life to begin from six months after fertilization; and that would really be
very, very, dangerous. It is now determined by science that life begins from the moment of
conception. There can be no doubt about it. So we should not give any doubt to Congress,
too.153
Upon further inquiry, it was asked:
Mr. Gascon: Mr. Presiding Officer, I would like to ask a question on that point. Actually, that
is one of the questions I was going to raise during the period of interpellations but it has been
expressed already. The provision, as proposed right now states:
The State shall equally protect the life of the mother and the life of the unborn from the
moment of conception.
When it speaks of "from the moment of conception," does this mean when the egg meets the
sperm?
Mr. Villegas: Yes, the ovum is fertilized by the sperm.
Mr. Gascon: Therefore that does not leave to Congress the right to determine whether certain
contraceptives that we know today are abortifacient or not because it is a fact that some of
the so-called contraceptives deter the rooting of the ovum in the uterus. If fertilization has
already occurred, the next process is for the fertilized ovum to travel towards the uterus and
to take root. What happens with some contraceptives is that they stop the opportunity for the
fertilized ovum to reach the uterus. Therefore, if we take the provision as it is proposed, these
so called contraceptives should be banned.
Mr. Villegas: Yes, if that physical fact is established, then that is what is called abortifacient
and, therefore, would be unconstitutional and should be banned under this provision.
Mr. Gascon: Yes. So my point is that I do not think it is up to Congress to state whether or
not these certain contraceptives are abortifacient. Scientifically and based on the provision as
it is now proposed, they are already considered abortifacient.154
From the deliberations above-quoted, it is apparent that the Framers of the Constitution
emphasized that the State shall provide equal protection to both the mother and the unborn
child from the earliest opportunity of life, that is, upon fertilization or upon the union of the
male sperm and the female ovum. It is also apparent is that the Framers of the Constitution
intended that to prohibit Congress from enacting measures that would allow it determine
when life begins.
Equally apparent, however, is that the Framers of the Constitution did not intend to ban all
contraceptives for being unconstitutional. In fact, Commissioner Bernardo Villegas,
spearheading the need to have a constitutional provision on the right to life, recognized that
the determination of whether a contraceptive device is an abortifacient is a question of fact
which should be left to the courts to decide on based on established evidence.155
From the discussions above, contraceptives that kill or destroy the fertilized ovum should be
deemed an abortive and thus prohibited. Conversely, contraceptives that actually prevent the
union of the male sperm and the female ovum, and those that similarly take action prior to
fertilization should be deemed non-abortive, and thus, constitutionally permissible.
As emphasized by the Framers of the Constitution:
xxx xxx xxx
Mr. Gascon: xx xx. As I mentioned in my speech on the US bases, I am pro-life, to the point
that I would like not only to protect the life of the unborn, but also the lives of the millions of
people in the world by fighting for a nuclear-free world. I would just like to be assured of the
legal and pragmatic implications of the term "protection of the life of the unborn from the
moment of conception." I raised some of these implications this afternoon when I interjected
in the interpellation of Commissioner Regalado. I would like to ask that question again for a
categorical answer.
I mentioned that if we institutionalize the term "the life of the unborn from the moment of
conception" we are also actually saying "no," not "maybe," to certain contraceptives which
136
are already being encouraged at this point in time. Is that the sense of the committee or does Atty. Noche:
it disagree with me?
Not under Section 12, Article II.
Mr. Azcuna: No, Mr. Presiding Officer, because contraceptives would be preventive. There is
no unborn yet. That is yet unshaped. Justice Bersamin:

Mr. Gascon: Yes, Mr. Presiding Officer, but I was speaking more about some contraceptives,
such as the intra-uterine device which actually stops the egg which has already been fertilized
from taking route to the uterus. So if we say "from the moment of conception," what really
occurs is that some of these contraceptives will have to be unconstitutionalized.
Mr. Azcuna: Yes, to the extent that it is after the fertilization.
Even if there is already information that condoms sometimes have porosity?
Atty. Noche:
Well, yes, Your Honor, there are scientific findings to that effect, Your Honor, but I am
discussing here Section 12, Article II, Your Honor, yes.

Mr. Gascon: Thank you, Mr. Presiding Officer.156 Justice Bersamin:

The fact that not all contraceptives are prohibited by the 1987 Constitution is even admitted Alright.
by petitioners during the oral arguments. There it was conceded that tubal ligation,
vasectomy, even condoms are not classified as abortifacients.157
Atty. Noche:

Atty. Noche:
And it's not, I have to admit it's not an abortifacient, Your Honor.158

Before the union of the eggs, egg and the sperm, there is no life yet.
Medical Meaning

Justice Bersamin:
That conception begins at fertilization is not bereft of medical foundation. Mosby s Medical,
Nursing, and Allied Health Dictionary defines conception as "the beginning of pregnancy
There is no life. usually taken to be the instant a spermatozoon enters an ovum and forms a viable
zygote."159
Atty. Noche:
It describes fertilization as "the union of male and female gametes to form a zygote from
So, there is no life to be protected. which the embryo develops."160

Justice Bersamin: The Textbook of Obstetrics (Physiological & Pathological Obstetrics),161 used by medical
schools in the Philippines, also concludes that human life (human person) begins at the
To be protected. moment of fertilization with the union of the egg and the sperm resulting in the formation of
a new individual, with a unique genetic composition that dictates all developmental stages
Atty. Noche: that ensue.

Under Section 12, yes. Similarly, recent medical research on the matter also reveals that: "Human development
begins after the union of male and female gametes or germ cells during a process known as
Justice Bersamin: fertilization (conception). Fertilization is a sequence of events that begins with the contact of
a sperm (spermatozoon) with a secondary oocyte (ovum) and ends with the fusion of their
pronuclei (the haploid nuclei of the sperm and ovum) and the mingling of their chromosomes
So you have no objection to condoms?

137
to form a new cell. This fertilized ovum, known as a zygote, is a large diploid cell that is the
beginning, or primordium, of a human being."162
The authors of Human Embryology & Teratology163 mirror the same position. They wrote:
"Although life is a continuous process, fertilization is a critical landmark because, under
ordinary circumstances, a new, genetically distinct human organism is thereby formed.... The
combination of 23 chromosomes present in each pronucleus results in 46 chromosomes in
the zygote. Thus the diploid number is restored and the embryonic genome is formed. The
embryo now exists as a genetic unity."
In support of the RH Bill, The Philippine Medical Association came out with a "Paper on the
Reproductive Health Bill (Responsible Parenthood Bill)" and therein concluded that:
CONCLUSION
The PMA throws its full weight in supporting the RH Bill at the same time that PMA maintains
its strong position that fertilization is sacred because it is at this stage that conception, and
thus human life, begins. Human lives are sacred from the moment of conception, and that
destroying those new lives is never licit, no matter what the purported good outcome would
be. In terms of biology and human embryology, a human being begins immediately at
fertilization and after that, there is no point along the continuous line of human embryogenesis
where only a "potential" human being can be posited. Any philosophical, legal, or political
conclusion cannot escape this objective scientific fact.
The scientific evidence supports the conclusion that a zygote is a human organism and that
the life of a new human being commences at a scientifically well defined "moment of
conception." This conclusion is objective, consistent with the factual evidence, and
independent of any specific ethical, moral, political, or religious view of human life or of human
embryos.164
Conclusion: The Moment of Conception is Reckoned from
Fertilization
In all, whether it be taken from a plain meaning, or understood under medical parlance, and
more importantly, following the intention of the Framers of the Constitution, the undeniable
conclusion is that a zygote is a human organism and that the life of a new human being
commences at a scientifically well-defined moment of conception, that is, upon fertilization.
For the above reasons, the Court cannot subscribe to the theory advocated by Hon. Lagman
that life begins at implantation.165 According to him, "fertilization and conception are two
distinct and successive stages in the reproductive process. They are not identical and
synonymous."166 Citing a letter of the WHO, he wrote that "medical authorities confirm that
the implantation of the fertilized ovum is the commencement of conception and it is only after
implantation that pregnancy can be medically detected."167
This theory of implantation as the beginning of life is devoid of any legal or scientific mooring.
It does not pertain to the beginning of life but to the viability of the fetus. The fertilized
ovum/zygote is not an inanimate object - it is a living human being complete with DNA and
46 chromosomes.168 Implantation has been conceptualized only for convenience by those
who had population control in mind. To adopt it would constitute textual infidelity not only to
the RH Law but also to the Constitution.
Not surprisingly, even the OSG does not support this position.
If such theory would be accepted, it would unnervingly legitimize the utilization of any drug
or device that would prevent the implantation of the fetus at the uterine wall. It would be
provocative and further aggravate religious-based divisiveness.
It would legally permit what the Constitution proscribes - abortion and abortifacients.
The RH Law and Abortion
The clear and unequivocal intent of the Framers of the 1987 Constitution in protecting the life
of the unborn from conception was to prevent the Legislature from enacting a measure
legalizing abortion. It was so clear that even the Court cannot interpret it otherwise. This
intent of the Framers was captured in the record of the proceedings of the 1986 Constitutional
Commission. Commissioner Bernardo Villegas, the principal proponent of the protection of the
unborn from conception, explained:
The intention .. .is to make sure that there would be no pro-abortion laws ever passed by
Congress or any pro-abortion decision passed by the Supreme Court.169
A reading of the RH Law would show that it is in line with this intent and actually proscribes
abortion. While the Court has opted not to make any determination, at this stage, when life
begins, it finds that the RH Law itself clearly mandates that protection be afforded from the
moment of fertilization. As pointed out by Justice Carpio, the RH Law is replete with provisions
that embody the policy of the law to protect to the fertilized ovum and that it should be
afforded safe travel to the uterus for implantation.170
Moreover, the RH Law recognizes that abortion is a crime under Article 256 of the Revised
Penal Code, which penalizes the destruction or expulsion of the fertilized ovum. Thus:
1] xx x.
Section 4. Definition of Terms. - For the purpose of this Act, the following terms shall be
defined as follows:
xxx.
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(q) Reproductive health care refers to the access to a full range of methods, facilities, services
and supplies that contribute to reproductive health and well-being by addressing reproductive
health-related problems. It also includes sexual health, the purpose of which is the
enhancement of life and personal relations. The elements of reproductive health care include
the following:
xxx.
(3) Proscription of abortion and management of abortion complications;
xxx.
2] xx x.
Section 4. x x x.
(s) Reproductive health rights refers to the rights of individuals and couples, to decide freely
and responsibly whether or not to have children; the number, spacing and timing of their
children; to make other decisions concerning reproduction, free of discrimination, coercion
and violence; to have the information and means to do so; and to attain the highest standard
of sexual health and reproductive health: Provided, however, That reproductive health rights
do not include abortion, and access to abortifacients.
3] xx x.
SEC. 29. Repealing Clause. - Except for prevailing laws against abortion, any law, presidential
decree or issuance, executive order, letter of instruction, administrative order, rule or
regulation contrary to or is inconsistent with the provisions of this Act including Republic Act
No. 7392, otherwise known as the Midwifery Act, is hereby repealed, modified or amended
accordingly.
The RH Law and Abortifacients
In carrying out its declared policy, the RH Law is consistent in prohibiting abortifacients. To
be clear, Section 4(a) of the RH Law defines an abortifacient as:
Section 4. Definition of Terms - x x x x
(a) Abortifacient refers to any drug or device that induces abortion or the destruction of a
fetus inside the mother's womb or the prevention of the fertilized ovum to reach and be
implanted in the mother's womb upon determination of the FDA.
As stated above, the RH Law mandates that protection must be afforded from the moment of
fertilization. By using the word " or," the RH Law prohibits not only drugs or devices that
prevent implantation, but also those that induce abortion and those that induce the
destruction of a fetus inside the mother's womb. Thus, an abortifacient is any drug or device
that either:
(a) Induces abortion; or
(b) Induces the destruction of a fetus inside the mother's womb; or
(c) Prevents the fertilized ovum to reach and be implanted in the mother's womb, upon
determination of the FDA.
Contrary to the assertions made by the petitioners, the Court finds that the RH Law, consistent
with the Constitution, recognizes that the fertilized ovum already has life and that the State
has a bounden duty to protect it. The conclusion becomes clear because the RH Law, first,
prohibits any drug or device that induces abortion (first kind), which, as discussed
exhaustively above, refers to that which induces the killing or the destruction of the fertilized
ovum, and, second, prohibits any drug or device the fertilized ovum to reach and be implanted
in the mother's womb (third kind).
By expressly declaring that any drug or device that prevents the fertilized ovum to reach and
be implanted in the mother's womb is an abortifacient (third kind), the RH Law does not
intend to mean at all that life only begins only at implantation, as Hon. Lagman suggests. It
also does not declare either that protection will only be given upon implantation, as the
petitioners likewise suggest. Rather, it recognizes that: one, there is a need to protect the
fertilized ovum which already has life, and two, the fertilized ovum must be protected the
moment it becomes existent - all the way until it reaches and implants in the mother's womb.
After all, if life is only recognized and afforded protection from the moment the fertilized ovum
implants - there is nothing to prevent any drug or device from killing or destroying the
fertilized ovum prior to implantation.
From the foregoing, the Court finds that inasmuch as it affords protection to the fertilized
ovum, the RH Law does not sanction abortion. To repeat, it is the Court's position that life
begins at fertilization, not at implantation. When a fertilized ovum is implanted in the uterine
wall , its viability is sustained but that instance of implantation is not the point of beginning
of life. It started earlier. And as defined by the RH Law, any drug or device that induces
abortion, that is, which kills or destroys the fertilized ovum or prevents the fertilized ovum to
reach and be implanted in the mother's womb, is an abortifacient.
Proviso Under Section 9 of the RH Law
This notwithstanding, the Court finds that the proviso under Section 9 of the law that "any
product or supply included or to be included in the EDL must have a certification from the FDA
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that said product and supply is made available on the condition that it is not to be used as an
abortifacient" as empty as it is absurd. The FDA, with all its expertise, cannot fully attest that
a drug or device will not all be used as an abortifacient, since the agency cannot be present
in every instance when the contraceptive product or supply will be used.171
Pursuant to its declared policy of providing access only to safe, legal and non-abortifacient
contraceptives, however, the Court finds that the proviso of Section 9, as worded, should
bend to the legislative intent and mean that "any product or supply included or to be included
in the EDL must have a certification from the FDA that said product and supply is made
available on the condition that it cannot be used as abortifacient." Such a construction is
consistent with the proviso under the second paragraph of the same section that provides:
Provided, further, That the foregoing offices shall not purchase or acquire by any means
emergency contraceptive pills, postcoital pills, abortifacients that will be used for such purpose
and their other forms or equivalent.
Abortifacients under the RH-IRR
At this juncture, the Court agrees with ALFI that the authors of the RH-IRR gravely abused
their office when they redefined the meaning of abortifacient. The RH Law defines
"abortifacient" as follows:
SEC. 4. Definition of Terms. - For the purpose of this Act, the following terms shall be defined
as follows:
(a) Abortifacient refers to any drug or device that induces abortion or the destruction of a
fetus inside the mother's womb or the prevention of the fertilized ovum to reach and be
implanted in the mother's womb upon determination of the FDA.
Section 3.0l (a) of the IRR, however, redefines "abortifacient" as:
Section 3.01 For purposes of these Rules, the terms shall be defined as follows:
a) Abortifacient refers to any drug or device that primarily induces abortion or the destruction
of a fetus inside the mother's womb or the prevention of the fertilized ovum to reach and be
implanted in the mother's womb upon determination of the Food and Drug Administration
(FDA). [Emphasis supplied]
Again in Section 3.0lG) of the RH-IRR, "contraceptive," is redefined, viz:
j) Contraceptive refers to any safe, legal, effective and scientifically proven modern family
planning method, device, or health product, whether natural or artificial, that prevents
pregnancy but does not primarily destroy a fertilized ovum or prevent a fertilized ovum from
being implanted in the mother's womb in doses of its approved indication as determined by
the Food and Drug Administration (FDA).
The above-mentioned section of the RH-IRR allows "contraceptives" and recognizes as
"abortifacient" only those that primarily induce abortion or the destruction of a fetus inside
the mother's womb or the prevention of the fertilized ovum to reach and be implanted in the
mother's womb.172
This cannot be done.
In this regard, the observations of Justice Brion and Justice Del Castillo are well taken. As
they pointed out, with the insertion of the word "primarily," Section 3.0l(a) and G) of the RH-
IRR173 must be struck down for being ultra vires.
Evidently, with the addition of the word "primarily," in Section 3.0l(a) and G) of the RH-IRR
is indeed ultra vires. It contravenes Section 4(a) of the RH Law and should, therefore, be
declared invalid. There is danger that the insertion of the qualifier "primarily" will pave the
way for the approval of contraceptives which may harm or destroy the life of the unborn from
conception/fertilization in violation of Article II, Section 12 of the Constitution. With such
qualification in the RH-IRR, it appears to insinuate that a contraceptive will only be considered
as an "abortifacient" if its sole known effect is abortion or, as pertinent here, the prevention
of the implantation of the fertilized ovum.
For the same reason, this definition of "contraceptive" would permit the approval of
contraceptives which are actually abortifacients because of their fail-safe mechanism.174
Also, as discussed earlier, Section 9 calls for the certification by the FDA that these
contraceptives cannot act as abortive. With this, together with the definition of an
abortifacient under Section 4 (a) of the RH Law and its declared policy against abortion, the
undeniable conclusion is that contraceptives to be included in the PNDFS and the EDL will not
only be those contraceptives that do not have the primary action of causing abortion or the
destruction of a fetus inside the mother's womb or the prevention of the fertilized ovum to
reach and be implanted in the mother's womb, but also those that do not have the secondary
action of acting the same way.
Indeed, consistent with the constitutional policy prohibiting abortion, and in line with the
principle that laws should be construed in a manner that its constitutionality is sustained, the
RH Law and its implementing rules must be consistent with each other in prohibiting abortion.
Thus, the word " primarily" in Section 3.0l(a) and G) of the RH-IRR should be declared void.
To uphold the validity of Section 3.0l(a) and G) of the RH-IRR and prohibit only those
contraceptives that have the primary effect of being an abortive would effectively "open the
floodgates to the approval of contraceptives which may harm or destroy the life of the unborn
from conception/fertilization in violation of Article II, Section 12 of the Constitution."175
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To repeat and emphasize, in all cases, the "principle of no abortion" embodied in the
constitutional protection of life must be upheld.
2-The Right to Health
The petitioners claim that the RH Law violates the right to health because it requires the
inclusion of hormonal contraceptives, intrauterine devices, injectables and family products
and supplies in the National Drug Formulary and the inclusion of the same in the regular
purchase of essential medicines and supplies of all national hospitals.176 Citing various
studies on the matter, the petitioners posit that the risk of developing breast and cervical
cancer is greatly increased in women who use oral contraceptives as compared to women who
never use them. They point out that the risk is decreased when the use of contraceptives is
discontinued. Further, it is contended that the use of combined oral contraceptive pills is
associated with a threefold increased risk of venous thromboembolism, a twofold increased
risk of ischematic stroke, and an indeterminate effect on risk of myocardial infarction.177
Given the definition of "reproductive health" and "sexual health" under Sections 4(p)178 and
(w)179 of the RH Law, the petitioners assert that the assailed legislation only seeks to ensure
that women have pleasurable and satisfying sex lives.180
The OSG, however, points out that Section 15, Article II of the Constitution is not self-
executory, it being a mere statement of the administration's principle and policy. Even if it
were self-executory, the OSG posits that medical authorities refute the claim that
contraceptive pose a danger to the health of women.181
The Court's Position
A component to the right to life is the constitutional right to health. In this regard, the
Constitution is replete with provisions protecting and promoting the right to health. Section
15, Article II of the Constitution provides:
Section 15. The State shall protect and promote the right to health of the people and instill
health consciousness among them.
A portion of Article XIII also specifically provides for the States' duty to provide for the health
of the people, viz:
HEALTH
Section 11. The State shall adopt an integrated and comprehensive approach to health
development which shall endeavor to make essential goods, health and other social services
available to all the people at affordable cost. There shall be priority for the needs of the
underprivileged, sick, elderly, disabled, women, and children. The State shall endeavor to
provide free medical care to paupers.
Section 12. The State shall establish and maintain an effective food and drug regulatory
system and undertake appropriate health, manpower development, and research, responsive
to the country's health needs and problems.
Section 13. The State shall establish a special agency for disabled person for their
rehabilitation, self-development, and self-reliance, and their integration into the mainstream
of society.
Finally, Section 9, Article XVI provides:
Section 9. The State shall protect consumers from trade malpractices and from substandard
or hazardous products.
Contrary to the respondent's notion, however, these provisions are self-executing. Unless the
provisions clearly express the contrary, the provisions of the Constitution should be
considered self-executory. There is no need for legislation to implement these self-executing
provisions.182 In Manila Prince Hotel v. GSIS,183 it was stated:
x x x Hence, unless it is expressly provided that a legislative act is necessary to enforce a
constitutional mandate, the presumption now is that all provisions of the constitution are self-
executing. If the constitutional provisions are treated as requiring legislation instead of self-
executing, the legislature would have the power to ignore and practically nullify the mandate
of the fundamental law. This can be cataclysmic. That is why the prevailing view is, as it has
always been, that –
... in case of doubt, the Constitution should be considered self-executing rather than non-
self-executing. . . . Unless the contrary is clearly intended, the provisions of the Constitution
should be considered self-executing, as a contrary rule would give the legislature discretion
to determine when, or whether, they shall be effective. These provisions would be
subordinated to the will of the lawmaking body, which could make them entirely meaningless
by simply refusing to pass the needed implementing statute. (Emphases supplied)
This notwithstanding, it bears mentioning that the petitioners, particularly ALFI, do not
question contraception and contraceptives per se.184 In fact, ALFI prays that the status quo
- under R.A. No. 5921 and R.A. No. 4729, the sale and distribution of contraceptives are not
prohibited when they are dispensed by a prescription of a duly licensed by a physician - be
maintained.185
The legislative intent in the enactment of the RH Law in this regard is to leave intact the
provisions of R.A. No. 4729. There is no intention at all to do away with it. It is still a good
law and its requirements are still in to be complied with. Thus, the Court agrees with the
observation of respondent Lagman that the effectivity of the RH Law will not lead to the
unmitigated proliferation of contraceptives since the sale, distribution and dispensation of
contraceptive drugs and devices will still require the prescription of a licensed physician. With
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R.A. No. 4729 in place, there exists adequate safeguards to ensure the public that only
contraceptives that are safe are made available to the public. As aptly explained by
respondent Lagman:
D. Contraceptives cannot be
dispensed and used without
prescription
108. As an added protection to voluntary users of contraceptives, the same cannot be
dispensed and used without prescription.
109. Republic Act No. 4729 or "An Act to Regulate the Sale, Dispensation, and/ or Distribution
of Contraceptive Drugs and Devices" and Republic Act No. 5921 or "An Act Regulating the
Practice of Pharmacy and Setting Standards of Pharmaceutical Education in the Philippines
and for Other Purposes" are not repealed by the RH Law and the provisions of said Acts are
not inconsistent with the RH Law.
110. Consequently, the sale, distribution and dispensation of contraceptive drugs and devices
are particularly governed by RA No. 4729 which provides in full:
"Section 1. It shall be unlawful for any person, partnership, or corporation, to sell, dispense
or otherwise distribute whether for or without consideration, any contraceptive drug or device,
unless such sale, dispensation or distribution is by a duly licensed drug store or
pharmaceutical company and with the prescription of a qualified medical practitioner.
"Sec. 2 . For the purpose of this Act:
"(a) "Contraceptive drug" is any medicine, drug, chemical, or portion which is used
exclusively for the purpose of preventing fertilization of the female ovum: and
"(b) "Contraceptive device" is any instrument, device, material, or agent introduced
into the female reproductive system for the primary purpose of preventing conception.
"Sec. 3 Any person, partnership, or corporation, violating the provisions of this Act shall be
punished with a fine of not more than five hundred pesos or an imprisonment of not less than
six months or more than one year or both in the discretion of the Court.
"This Act shall take effect upon its approval.
"Approved: June 18, 1966"
111. Of the same import, but in a general manner, Section 25 of RA No. 5921 provides:
"Section 25. Sale of medicine, pharmaceuticals, drugs and devices. No medicine,
pharmaceutical, or drug of whatever nature and kind or device shall be compounded,
dispensed, sold or resold, or otherwise be made available to the consuming public except
through a prescription drugstore or hospital pharmacy, duly established in accordance with
the provisions of this Act.
112. With all of the foregoing safeguards, as provided for in the RH Law and other relevant
statutes, the pretension of the petitioners that the RH Law will lead to the unmitigated
proliferation of contraceptives, whether harmful or not, is completely unwarranted and
baseless.186 [Emphases in the Original. Underlining supplied.]
In Re: Section 10 of the RH Law:
The foregoing safeguards should be read in connection with Section 10 of the RH Law which
provides:
SEC. 10. Procurement and Distribution of Family Planning Supplies. - The DOH shall procure,
distribute to LGUs and monitor the usage of family planning supplies for the whole country.
The DOH shall coordinate with all appropriate local government bodies to plan and implement
this procurement and distribution program. The supply and budget allotments shall be based
on, among others, the current levels and projections of the following:
(a) Number of women of reproductive age and couples who want to space or limit their
children;
(b) Contraceptive prevalence rate, by type of method used; and
(c) Cost of family planning supplies.
Provided, That LGUs may implement its own procurement, distribution and monitoring
program consistent with the overall provisions of this Act and the guidelines of the DOH.
Thus, in the distribution by the DOH of contraceptive drugs and devices, it must consider the
provisions of R.A. No. 4729, which is still in effect, and ensure that the contraceptives that it
will procure shall be from a duly licensed drug store or pharmaceutical company and that the
actual dispensation of these contraceptive drugs and devices will done following a prescription
of a qualified medical practitioner. The distribution of contraceptive drugs and devices must
not be indiscriminately done. The public health must be protected by all possible means. As
pointed out by Justice De Castro, a heavy responsibility and burden are assumed by the
government in supplying contraceptive drugs and devices, for it may be held accountable for
any injury, illness or loss of life resulting from or incidental to their use.187
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At any rate, it bears pointing out that not a single contraceptive has yet been submitted to
the FDA pursuant to the RH Law. It behooves the Court to await its determination which drugs
or devices are declared by the FDA as safe, it being the agency tasked to ensure that food
and medicines available to the public are safe for public consumption. Consequently, the Court
finds that, at this point, the attack on the RH Law on this ground is premature. Indeed, the
various kinds of contraceptives must first be measured up to the constitutional yardstick as
expounded herein, to be determined as the case presents itself.
At this point, the Court is of the strong view that Congress cannot legislate that hormonal
contraceptives and intra-uterine devices are safe and non-abortifacient. The first sentence of
Section 9 that ordains their inclusion by the National Drug Formulary in the EDL by using the
mandatory "shall" is to be construed as operative only after they have been tested, evaluated,
and approved by the FDA. The FDA, not Congress, has the expertise to determine whether a
particular hormonal contraceptive or intrauterine device is safe and non-abortifacient. The
provision of the third sentence concerning the requirements for the inclusion or removal of a
particular family planning supply from the EDL supports this construction.
Stated differently, the provision in Section 9 covering the inclusion of hormonal
contraceptives, intra-uterine devices, injectables, and other safe, legal, non-abortifacient and
effective family planning products and supplies by the National Drug Formulary in the EDL is
not mandatory. There must first be a determination by the FDA that they are in fact safe,
legal, non-abortifacient and effective family planning products and supplies. There can be no
predetermination by Congress that the gamut of contraceptives are "safe, legal, non-
abortifacient and effective" without the proper scientific examination.
3 -Freedom of Religion
and the Right to Free Speech
Position of the Petitioners:
1. On Contraception
While contraceptives and procedures like vasectomy and tubal ligation are not covered by the
constitutional proscription, there are those who, because of their religious education and
background, sincerely believe that contraceptives, whether abortifacient or not, are evil.
Some of these are medical practitioners who essentially claim that their beliefs prohibit not
only the use of contraceptives but also the willing participation and cooperation in all things
dealing with contraceptive use. Petitioner PAX explained that "contraception is gravely
opposed to marital chastity, it is contrary to the good of the transmission of life, and to the
reciprocal self-giving of the spouses; it harms true love and denies the sovereign rule of God
in the transmission of Human life."188
The petitioners question the State-sponsored procurement of contraceptives, arguing that the
expenditure of their taxes on contraceptives violates the guarantee of religious freedom since
contraceptives contravene their religious beliefs.189
2. On Religious Accommodation and
The Duty to Refer
Petitioners Imbong and Luat note that while the RH Law attempts to address religious
sentiments by making provisions for a conscientious objector, the constitutional guarantee is
nonetheless violated because the law also imposes upon the conscientious objector the duty
to refer the patient seeking reproductive health services to another medical practitioner who
would be able to provide for the patient's needs. For the petitioners, this amounts to requiring
the conscientious objector to cooperate with the very thing he refuses to do without violating
his/her religious beliefs.190
They further argue that even if the conscientious objector's duty to refer is recognized, the
recognition is unduly limited, because although it allows a conscientious objector in Section
23 (a)(3) the option to refer a patient seeking reproductive health services and information -
no escape is afforded the conscientious objector in Section 23 (a)(l) and (2), i.e. against a
patient seeking reproductive health procedures. They claim that the right of other individuals
to conscientiously object, such as: a) those working in public health facilities referred to in
Section 7; b) public officers involved in the implementation of the law referred to in Section
23(b ); and c) teachers in public schools referred to in Section 14 of the RH Law, are also not
recognize.191
Petitioner Echavez and the other medical practitioners meanwhile, contend that the
requirement to refer the matter to another health care service provider is still considered a
compulsion on those objecting healthcare service providers. They add that compelling them
to do the act against their will violates the Doctrine of Benevolent Neutrality. Sections 9, 14
and 1 7 of the law are too secular that they tend to disregard the religion of Filipinos.
Authorizing the use of contraceptives with abortive effects, mandatory sex education,
mandatory pro-bono reproductive health services to indigents encroach upon the religious
freedom of those upon whom they are required.192
Petitioner CFC also argues that the requirement for a conscientious objector to refer the
person seeking reproductive health care services to another provider infringes on one's
freedom of religion as it forces the objector to become an unwilling participant in the
commission of a serious sin under Catholic teachings. While the right to act on one's belief
may be regulated by the State, the acts prohibited by the RH Law are passive acts which
produce neither harm nor injury to the public.193
Petitioner CFC adds that the RH Law does not show compelling state interest to justify
regulation of religious freedom because it mentions no emergency, risk or threat that
endangers state interests. It does not explain how the rights of the people (to equality, non-
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discrimination of rights, sustainable human development, health, education, information,
choice and to make decisions according to religious convictions, ethics, cultural beliefs and
the demands of responsible parenthood) are being threatened or are not being met as to
justify the impairment of religious freedom.194
Finally, the petitioners also question Section 15 of the RH Law requiring would-be couples to
attend family planning and responsible parenthood seminars and to obtain a certificate of
compliance. They claim that the provision forces individuals to participate in the
implementation of the RH Law even if it contravenes their religious beliefs.195 As the assailed
law dangles the threat of penalty of fine and/or imprisonment in case of non-compliance with
its provisions, the petitioners claim that the RH Law forcing them to provide, support and
facilitate access and information to contraception against their beliefs must be struck down
as it runs afoul to the constitutional guarantee of religious freedom.
The Respondents' Positions
The respondents, on the other hand, contend that the RH Law does not provide that a specific
mode or type of contraceptives be used, be it natural or artificial. It neither imposes nor
sanctions any religion or belief.196 They point out that the RH Law only seeks to serve the
public interest by providing accessible, effective and quality reproductive health services to
ensure maternal and child health, in line with the State's duty to bring to reality the social
justice health guarantees of the Constitution,197 and that what the law only prohibits are
those acts or practices, which deprive others of their right to reproductive health.198 They
assert that the assailed law only seeks to guarantee informed choice, which is an assurance
that no one will be compelled to violate his religion against his free will.199
The respondents add that by asserting that only natural family planning should be allowed,
the petitioners are effectively going against the constitutional right to religious freedom, the
same right they invoked to assail the constitutionality of the RH Law.200 In other words, by
seeking the declaration that the RH Law is unconstitutional, the petitioners are asking that
the Court recognize only the Catholic Church's sanctioned natural family planning methods
and impose this on the entire citizenry.201
With respect to the duty to refer, the respondents insist that the same does not violate the
constitutional guarantee of religious freedom, it being a carefully balanced compromise
between the interests of the religious objector, on one hand, who is allowed to keep silent but
is required to refer -and that of the citizen who needs access to information and who has the
right to expect that the health care professional in front of her will act professionally. For the
respondents, the concession given by the State under Section 7 and 23(a)(3) is sufficient
accommodation to the right to freely exercise one's religion without unnecessarily infringing
on the rights of others.202
Whatever burden is placed on the petitioner's religious freedom is minimal as the duty to refer
is limited in duration, location and impact.203
Regarding mandatory family planning seminars under Section 15 , the respondents claim that
it is a reasonable regulation providing an opportunity for would-be couples to have access to
information regarding parenthood, family planning, breastfeeding and infant nutrition. It is
argued that those who object to any information received on account of their attendance in
the required seminars are not compelled to accept information given to them. They are
completely free to reject any information they do not agree with and retain the freedom to
decide on matters of family life without intervention of the State.204
For their part, respondents De Venecia et al., dispute the notion that natural family planning
is the only method acceptable to Catholics and the Catholic hierarchy. Citing various studies
and surveys on the matter, they highlight the changing stand of the Catholic Church on
contraception throughout the years and note the general acceptance of the benefits of
contraceptives by its followers in planning their families.
The Church and The State
At the outset, it cannot be denied that we all live in a heterogeneous society. It is made up
of people of diverse ethnic, cultural and religious beliefs and backgrounds. History has shown
us that our government, in law and in practice, has allowed these various religious, cultural,
social and racial groups to thrive in a single society together. It has embraced minority groups
and is tolerant towards all - the religious people of different sects and the non-believers. The
undisputed fact is that our people generally believe in a deity, whatever they conceived Him
to be, and to whom they call for guidance and enlightenment in crafting our fundamental law.
Thus, the preamble of the present Constitution reads:
We, the sovereign Filipino people, imploring the aid of Almighty God, in order to build a just
and humane society, and establish a Government that shall embody our ideals and
aspirations, promote the common good, conserve and develop our patrimony, and secure to
ourselves and our posterity, the blessings of independence and democracy under the rule of
law and a regime of truth, justice, freedom, love, equality, and peace, do ordain and
promulgate this Constitution.
The Filipino people in "imploring the aid of Almighty God " manifested their spirituality innate
in our nature and consciousness as a people, shaped by tradition and historical experience.
As this is embodied in the preamble, it means that the State recognizes with respect the
influence of religion in so far as it instills into the mind the purest principles of morality.205
Moreover, in recognition of the contributions of religion to society, the 1935, 1973 and 1987
constitutions contain benevolent and accommodating provisions towards religions such as tax
exemption of church property, salary of religious officers in government institutions, and
optional religious instructions in public schools.
The Framers, however, felt the need to put up a strong barrier so that the State would not
encroach into the affairs of the church, and vice-versa. The principle of separation of Church
and State was, thus, enshrined in Article II, Section 6 of the 1987 Constitution, viz:
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Section 6. The separation of Church and State shall be inviolable.
Verily, the principle of separation of Church and State is based on mutual respect.1âwphi1
Generally, the State cannot meddle in the internal affairs of the church, much less question
its faith and dogmas or dictate upon it. It cannot favor one religion and discriminate against
another. On the other hand, the church cannot impose its beliefs and convictions on the State
and the rest of the citizenry. It cannot demand that the nation follow its beliefs, even if it
sincerely believes that they are good for the country.
Consistent with the principle that not any one religion should ever be preferred over another,
the Constitution in the above-cited provision utilizes the term "church" in its generic sense,
which refers to a temple, a mosque, an iglesia, or any other house of God which
metaphorically symbolizes a religious organization. Thus, the "Church" means the religious
congregations collectively.
Balancing the benefits that religion affords and the need to provide an ample barrier to protect
the State from the pursuit of its secular objectives, the Constitution lays down the following
mandate in Article III, Section 5 and Article VI, Section 29 (2), of the 1987 Constitution:
Section. 5. No law shall be made respecting an establishment of religion, or prohibiting the
free exercise thereof. The free exercise and enjoyment of religious profession and worship,
without discrimination or preference, shall forever be allowed. No religious test shall be
required for the exercise of civil or political rights.
Section 29.
xxx.
No public money or property shall be appropriated, applied, paid, or employed, directly or
indirectly, for the use, benefit, or support of any sect, church, denomination, sectarian
institution, or system of religion, or of any priest, preacher, minister, other religious teacher,
or dignitary as such, except when such priest, preacher, minister, or dignitary is assigned to
the armed forces, or to any penal institution, or government orphanage or leprosarium.
In short, the constitutional assurance of religious freedom provides two guarantees: the
Establishment Clause and the Free Exercise Clause.
The establishment clause "principally prohibits the State from sponsoring any religion or
favoring any religion as against other religions. It mandates a strict neutrality in affairs among
religious groups."206 Essentially, it prohibits the establishment of a state religion and the use
of public resources for the support or prohibition of a religion.
On the other hand, the basis of the free exercise clause is the respect for the inviolability of
the human conscience.207 Under this part of religious freedom guarantee, the State is
prohibited from unduly interfering with the outside manifestations of one's belief and faith.208
Explaining the concept of religious freedom, the Court, in Victoriano v. Elizalde Rope Workers
Union209 wrote:
The constitutional provisions not only prohibits legislation for the support of any religious
tenets or the modes of worship of any sect, thus forestalling compulsion by law of the
acceptance of any creed or the practice of any form of worship (U.S. Ballard, 322 U.S. 78, 88
L. ed. 1148, 1153), but also assures the free exercise of one's chosen form of religion within
limits of utmost amplitude. It has been said that the religion clauses of the Constitution are
all designed to protect the broadest possible liberty of conscience, to allow each man to
believe as his conscience directs, to profess his beliefs, and to live as he believes he ought to
live, consistent with the liberty of others and with the common good. Any legislation whose
effect or purpose is to impede the observance of one or all religions, or to discriminate
invidiously between the religions, is invalid, even though the burden may be characterized as
being only indirect. (Sherbert v. Verner, 374 U.S. 398, 10 L.ed.2d 965, 83 S. Ct. 1970) But
if the state regulates conduct by enacting, within its power, a general law which has for its
purpose and effect to advance the state's secular goals, the statute is valid despite its indirect
burden on religious observance, unless the state can accomplish its purpose without imposing
such burden. (Braunfeld v. Brown, 366 U.S. 599, 6 Led. 2d. 563, 81 S. Ct. 144; McGowan v.
Maryland, 366 U.S. 420, 444-5 and 449).
As expounded in Escritor,
The establishment and free exercise clauses were not designed to serve contradictory
purposes. They have a single goal-to promote freedom of individual religious beliefs and
practices. In simplest terms, the free exercise clause prohibits government from inhibiting
religious beliefs with penalties for religious beliefs and practice, while the establishment clause
prohibits government from inhibiting religious belief with rewards for religious beliefs and
practices. In other words, the two religion clauses were intended to deny government the
power to use either the carrot or the stick to influence individual religious beliefs and
practices.210
Corollary to the guarantee of free exercise of one's religion is the principle that the guarantee
of religious freedom is comprised of two parts: the freedom to believe, and the freedom to
act on one's belief. The first part is absolute. As explained in Gerona v. Secretary of
Education:211
The realm of belief and creed is infinite and limitless bounded only by one's imagination and
thought. So is the freedom of belief, including religious belief, limitless and without bounds.
One may believe in most anything, however strange, bizarre and unreasonable the same may
appear to others, even heretical when weighed in the scales of orthodoxy or doctrinal
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standards. But between the freedom of belief and the exercise of said belief, there is quite a
stretch of road to travel.212
The second part however, is limited and subject to the awesome power of the State and can
be enjoyed only with proper regard to the rights of others. It is "subject to regulation where
the belief is translated into external acts that affect the public welfare."213
Legislative Acts and the
Free Exercise Clause
Thus, in case of conflict between the free exercise clause and the State, the Court adheres to
the doctrine of benevolent neutrality. This has been clearly decided by the Court in Estrada
v. Escritor, (Escritor)214 where it was stated "that benevolent neutrality-accommodation,
whether mandatory or permissive, is the spirit, intent and framework underlying the Philippine
Constitution."215 In the same case, it was further explained that"
The benevolent neutrality theory believes that with respect to these governmental actions,
accommodation of religion may be allowed, not to promote the government's favored form of
religion, but to allow individuals and groups to exercise their religion without hindrance. "The
purpose of accommodation is to remove a burden on, or facilitate the exercise of, a person's
or institution's religion."216 "What is sought under the theory of accommodation is not a
declaration of unconstitutionality of a facially neutral law, but an exemption from its
application or its 'burdensome effect,' whether by the legislature or the courts."217
In ascertaining the limits of the exercise of religious freedom, the compelling state interest
test is proper.218 Underlying the compelling state interest test is the notion that free exercise
is a fundamental right and that laws burdening it should be subject to strict scrutiny.219 In
Escritor, it was written:
Philippine jurisprudence articulates several tests to determine these limits. Beginning with the
first case on the Free Exercise Clause, American Bible Society, the Court mentioned the "clear
and present danger" test but did not employ it. Nevertheless, this test continued to be cited
in subsequent cases on religious liberty. The Gerona case then pronounced that the test of
permissibility of religious freedom is whether it violates the established institutions of society
and law. The Victoriano case mentioned the "immediate and grave danger" test as well as the
doctrine that a law of general applicability may burden religious exercise provided the law is
the least restrictive means to accomplish the goal of the law. The case also used, albeit
inappropriately, the "compelling state interest" test. After Victoriano , German went back to
the Gerona rule. Ebralinag then employed the "grave and immediate danger" test and
overruled the Gerona test. The fairly recent case of Iglesia ni Cristo went back to the " clear
and present danger" test in the maiden case of A merican Bible Society. Not surprisingly, all
the cases which employed the "clear and present danger" or "grave and immediate danger"
test involved, in one form or another, religious speech as this test is often used in cases on
freedom of expression. On the other hand, the Gerona and German cases set the rule that
religious freedom will not prevail over established institutions of society and law. Gerona,
however, which was the authority cited by German has been overruled by Ebralinag which
employed the "grave and immediate danger" test . Victoriano was the only case that employed
the "compelling state interest" test, but as explained previously, the use of the test was
inappropriate to the facts of the case.
The case at bar does not involve speech as in A merican Bible Society, Ebralinag and Iglesia
ni Cristo where the "clear and present danger" and "grave and immediate danger" tests were
appropriate as speech has easily discernible or immediate effects. The Gerona and German
doctrine, aside from having been overruled, is not congruent with the benevolent neutrality
approach, thus not appropriate in this jurisdiction. Similar to Victoriano, the present case
involves purely conduct arising from religious belief. The "compelling state interest" test is
proper where conduct is involved for the whole gamut of human conduct has different effects
on the state's interests: some effects may be immediate and short-term while others delayed
and far-reaching. A test that would protect the interests of the state in preventing a
substantive evil, whether immediate or delayed, is therefore necessary. However, not any
interest of the state would suffice to prevail over the right to religious freedom as this is a
fundamental right that enjoys a preferred position in the hierarchy of rights - "the most
inalienable and sacred of all human rights", in the words of Jefferson. This right is sacred for
an invocation of the Free Exercise Clause is an appeal to a higher sovereignty. The entire
constitutional order of limited government is premised upon an acknowledgment of such
higher sovereignty, thus the Filipinos implore the "aid of Almighty God in order to build a just
and humane society and establish a government." As held in Sherbert, only the gravest
abuses, endangering paramount interests can limit this fundamental right. A mere balancing
of interests which balances a right with just a colorable state interest is therefore not
appropriate. Instead, only a compelling interest of the state can prevail over the fundamental
right to religious liberty. The test requires the state to carry a heavy burden, a compelling
one, for to do otherwise would allow the state to batter religion, especially the less powerful
ones until they are destroyed. In determining which shall prevail between the state's interest
and religious liberty, reasonableness shall be the guide. The "compelling state interest" serves
the purpose of revering religious liberty while at the same time affording protection to the
paramount interests of the state. This was the test used in Sherbert which involved conduct,
i.e. refusal to work on Saturdays. In the end, the "compelling state interest" test, by upholding
the paramount interests of the state, seeks to protect the very state, without which, religious
liberty will not be preserved. [Emphases in the original. Underlining supplied.]
The Court's Position
In the case at bench, it is not within the province of the Court to determine whether the use
of contraceptives or one's participation in the support of modem reproductive health measures
is moral from a religious standpoint or whether the same is right or wrong according to one's
dogma or belief. For the Court has declared that matters dealing with "faith, practice, doctrine,
form of worship, ecclesiastical law, custom and rule of a church ... are unquestionably
ecclesiastical matters which are outside the province of the civil courts."220 The jurisdiction
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of the Court extends only to public and secular morality. Whatever pronouncement the Court
makes in the case at bench should be understood only in this realm where it has authority.
Stated otherwise, while the Court stands without authority to rule on ecclesiastical matters,
as vanguard of the Constitution, it does have authority to determine whether the RH Law
contravenes the guarantee of religious freedom.
At first blush, it appears that the RH Law recognizes and respects religion and religious beliefs
and convictions. It is replete with assurances the no one can be compelled to violate the
tenets of his religion or defy his religious convictions against his free will. Provisions in the RH
Law respecting religious freedom are the following:
1. The State recognizes and guarantees the human rights of all persons including their right
to equality and nondiscrimination of these rights, the right to sustainable human
development, the right to health which includes reproductive health, the right to education
and information, and the right to choose and make decisions for themselves in accordance
with their religious convictions, ethics, cultural beliefs, and the demands of responsible
parenthood. [Section 2, Declaration of Policy]
2 . The State recognizes marriage as an inviolable social institution and the foundation of the
family which in turn is the foundation of the nation. Pursuant thereto, the State shall defend:
(a) The right of spouses to found a family in accordance with their religious convictions and
the demands of responsible parenthood." [Section 2, Declaration of Policy]
3. The State shall promote and provide information and access, without bias, to all methods
of family planning, including effective natural and modern methods which have been proven
medically safe, legal, non-abortifacient, and effective in accordance with scientific and
evidence-based medical research standards such as those registered and approved by the
FDA for the poor and marginalized as identified through the NHTS-PR and other government
measures of identifying marginalization: Provided, That the State shall also provide funding
support to promote modern natural methods of family planning, especially the Billings
Ovulation Method, consistent with the needs of acceptors and their religious convictions.
[Section 3(e), Declaration of Policy]
4. The State shall promote programs that: (1) enable individuals and couples to have the
number of children they desire with due consideration to the health, particularly of women,
and the resources available and affordable to them and in accordance with existing laws,
public morals and their religious convictions. [Section 3CDJ
5. The State shall respect individuals' preferences and choice of family planning methods that
are in accordance with their religious convictions and cultural beliefs, taking into consideration
the State's obligations under various human rights instruments. [Section 3(h)]
6. Active participation by nongovernment organizations (NGOs) , women's and people's
organizations, civil society, faith-based organizations, the religious sector and communities is
crucial to ensure that reproductive health and population and development policies, plans,
and programs will address the priority needs of women, the poor, and the marginalized.
[Section 3(i)]
7. Responsible parenthood refers to the will and ability of a parent to respond to the needs
and aspirations of the family and children. It is likewise a shared responsibility between
parents to determine and achieve the desired number of children, spacing and timing of their
children according to their own family life aspirations, taking into account psychological
preparedness, health status, sociocultural and economic concerns consistent with their
religious convictions. [Section 4(v)] (Emphases supplied)
While the Constitution prohibits abortion, laws were enacted allowing the use of
contraceptives. To some medical practitioners, however, the whole idea of using
contraceptives is an anathema. Consistent with the principle of benevolent neutrality, their
beliefs should be respected.
The Establishment Clause
and Contraceptives
In the same breath that the establishment clause restricts what the government can do with
religion, it also limits what religious sects can or cannot do with the government. They can
neither cause the government to adopt their particular doctrines as policy for everyone, nor
can they not cause the government to restrict other groups. To do so, in simple terms, would
cause the State to adhere to a particular religion and, thus, establishing a state religion.
Consequently, the petitioners are misguided in their supposition that the State cannot
enhance its population control program through the RH Law simply because the promotion of
contraceptive use is contrary to their religious beliefs. Indeed, the State is not precluded to
pursue its legitimate secular objectives without being dictated upon by the policies of any one
religion. One cannot refuse to pay his taxes simply because it will cloud his conscience. The
demarcation line between Church and State demands that one render unto Caesar the things
that are Caesar's and unto God the things that are God's.221
The Free Exercise Clause and the Duty to Refer
While the RH Law, in espousing state policy to promote reproductive health manifestly
respects diverse religious beliefs in line with the Non-Establishment Clause, the same
conclusion cannot be reached with respect to Sections 7, 23 and 24 thereof. The said
provisions commonly mandate that a hospital or a medical practitioner to immediately refer
a person seeking health care and services under the law to another accessible healthcare
provider despite their conscientious objections based on religious or ethical beliefs.
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In a situation where the free exercise of religion is allegedly burdened by government
legislation or practice, the compelling state interest test in line with the Court's espousal of
the Doctrine of Benevolent Neutrality in Escritor, finds application. In this case, the
conscientious objector's claim to religious freedom would warrant an exemption from
obligations under the RH Law, unless the government succeeds in demonstrating a more
compelling state interest in the accomplishment of an important secular objective. Necessarily
so, the plea of conscientious objectors for exemption from the RH Law deserves no less than
strict scrutiny.
In applying the test, the first inquiry is whether a conscientious objector's right to religious
freedom has been burdened. As in Escritor, there is no doubt that an intense tug-of-war
plagues a conscientious objector. One side coaxes him into obedience to the law and the
abandonment of his religious beliefs, while the other entices him to a clean conscience yet
under the pain of penalty. The scenario is an illustration of the predicament of medical
practitioners whose religious beliefs are incongruent with what the RH Law promotes.
The Court is of the view that the obligation to refer imposed by the RH Law violates the
religious belief and conviction of a conscientious objector. Once the medical practitioner,
against his will, refers a patient seeking information on modem reproductive health products,
services, procedures and methods, his conscience is immediately burdened as he has been
compelled to perform an act against his beliefs. As Commissioner Joaquin A. Bernas
(Commissioner Bernas) has written, "at the basis of the free exercise clause is the respect for
the inviolability of the human conscience.222
Though it has been said that the act of referral is an opt-out clause, it is, however, a false
compromise because it makes pro-life health providers complicit in the performance of an act
that they find morally repugnant or offensive. They cannot, in conscience, do indirectly what
they cannot do directly. One may not be the principal, but he is equally guilty if he abets the
offensive act by indirect participation.
Moreover, the guarantee of religious freedom is necessarily intertwined with the right to free
speech, it being an externalization of one's thought and conscience. This in turn includes the
right to be silent. With the constitutional guarantee of religious freedom follows the protection
that should be afforded to individuals in communicating their beliefs to others as well as the
protection for simply being silent. The Bill of Rights guarantees the liberty of the individual to
utter what is in his mind and the liberty not to utter what is not in his mind.223 While the RH
Law seeks to provide freedom of choice through informed consent, freedom of choice
guarantees the liberty of the religious conscience and prohibits any degree of compulsion or
burden, whether direct or indirect, in the practice of one's religion.224
In case of conflict between the religious beliefs and moral convictions of individuals, on one
hand, and the interest of the State, on the other, to provide access and information on
reproductive health products, services, procedures and methods to enable the people to
determine the timing, number and spacing of the birth of their children, the Court is of the
strong view that the religious freedom of health providers, whether public or private, should
be accorded primacy. Accordingly, a conscientious objector should be exempt from
compliance with the mandates of the RH Law. If he would be compelled to act contrary to his
religious belief and conviction, it would be violative of "the principle of non-coercion"
enshrined in the constitutional right to free exercise of religion.
Interestingly, on April 24, 2013, Scotland's Inner House of the Court of Session, found in the
case of Doogan and Wood v. NHS Greater Glasgow and Clyde Health Board,225 that the
midwives claiming to be conscientious objectors under the provisions of Scotland's Abortion
Act of 1967, could not be required to delegate, supervise or support staff on their labor ward
who were involved in abortions.226 The Inner House stated "that if 'participation' were defined
according to whether the person was taking part 'directly' or ' indirectly' this would actually
mean more complexity and uncertainty."227
While the said case did not cover the act of referral, the applicable principle was the same -
they could not be forced to assist abortions if it would be against their conscience or will.
Institutional Health Providers
The same holds true with respect to non-maternity specialty hospitals and hospitals owned
and operated by a religious group and health care service providers. Considering that Section
24 of the RH Law penalizes such institutions should they fail or refuse to comply with their
duty to refer under Section 7 and Section 23(a)(3), the Court deems that it must be struck
down for being violative of the freedom of religion. The same applies to Section 23(a)(l) and
(a)(2) in relation to Section 24, considering that in the dissemination of information regarding
programs and services and in the performance of reproductive health procedures, the religious
freedom of health care service providers should be respected.
In the case of Islamic Da'wah Council of the Philippines, Inc. v. Office of the Executive
Secretary228 it was stressed:
Freedom of religion was accorded preferred status by the framers of our fundamental law.
And this Court has consistently affirmed this preferred status, well aware that it is "designed
to protect the broadest possible liberty of conscience, to allow each man to believe as his
conscience directs, to profess his beliefs, and to live as he believes he ought to live, consistent
with the liberty of others and with the common good."10
The Court is not oblivious to the view that penalties provided by law endeavour to ensure
compliance. Without set consequences for either an active violation or mere inaction, a law
tends to be toothless and ineffectual. Nonetheless, when what is bartered for an effective
implementation of a law is a constitutionally-protected right the Court firmly chooses to stamp
its disapproval. The punishment of a healthcare service provider, who fails and/or refuses to
refer a patient to another, or who declines to perform reproductive health procedure on a
148
patient because incompatible religious beliefs, is a clear inhibition of a constitutional
guarantee which the Court cannot allow.
The Implementing Rules and Regulation (RH-IRR)
The last paragraph of Section 5.24 of the RH-IRR reads:
Provided, That skilled health professional such as provincial, city or municipal health officers,
chiefs of hospital, head nurses, supervising midwives, among others, who by virtue of their
office are specifically charged with the duty to implement the provisions of the RPRH Act and
these Rules, cannot be considered as conscientious objectors.
This is discriminatory and violative of the equal protection clause. The conscientious objection
clause should be equally protective of the religious belief of public health officers. There is no
perceptible distinction why they should not be considered exempt from the mandates of the
law. The protection accorded to other conscientious objectors should equally apply to all
medical practitioners without distinction whether they belong to the public or private sector.
After all, the freedom to believe is intrinsic in every individual and the protective robe that
guarantees its free exercise is not taken off even if one acquires employment in the
government.
It should be stressed that intellectual liberty occupies a place inferior to none in the hierarchy
of human values. The mind must be free to think what it wills, whether in the secular or
religious sphere, to give expression to its beliefs by oral discourse or through the media and,
thus, seek other candid views in occasions or gatherings or in more permanent aggrupation.
Embraced in such concept then are freedom of religion, freedom of speech, of the press,
assembly and petition, and freedom of association.229
The discriminatory provision is void not only because no such exception is stated in the RH
Law itself but also because it is violative of the equal protection clause in the Constitution.
Quoting respondent Lagman, if there is any conflict between the RH-IRR and the RH Law, the
law must prevail.
Justice Mendoza:
I'll go to another point. The RH law .. .in your Comment- in-Intervention on page 52, you
mentioned RH Law is replete with provisions in upholding the freedom of religion and
respecting religious convictions. Earlier, you affirmed this with qualifications. Now, you have
read, I presumed you have read the IRR-Implementing Rules and Regulations of the RH Bill?
Congressman Lagman:
Yes, Your Honor, I have read but I have to admit, it's a long IRR and I have not thoroughly
dissected the nuances of the provisions.
Justice Mendoza:
I will read to you one provision. It's Section 5.24. This I cannot find in the RH Law. But in the
IRR it says: " .... skilled health professionals such as provincial, city or municipal health
officers, chief of hospitals, head nurses, supervising midwives, among others, who by virtue
of their office are specifically charged with the duty to implement the provisions of the RPRH
Act and these Rules, cannot be considered as conscientious objectors." Do you agree with
this?
Congressman Lagman:
I will have to go over again the provisions, Your Honor.
Justice Mendoza:
In other words, public health officers in contrast to the private practitioners who can be
conscientious objectors, skilled health professionals cannot be considered conscientious
objectors. Do you agree with this? Is this not against the constitutional right to the religious
belief?
Congressman Lagman:
Your Honor, if there is any conflict between the IRR and the law, the law must prevail.230
Compelling State Interest
The foregoing discussion then begets the question on whether the respondents, in defense of
the subject provisions, were able to: 1] demonstrate a more compelling state interest to
restrain conscientious objectors in their choice of services to render; and 2] discharge the
burden of proof that the obligatory character of the law is the least intrusive means to achieve
the objectives of the law.
Unfortunately, a deep scrutiny of the respondents' submissions proved to be in vain. The OSG
was curiously silent in the establishment of a more compelling state interest that would
rationalize the curbing of a conscientious objector's right not to adhere to an action contrary
to his religious convictions. During the oral arguments, the OSG maintained the same silence
and evasion. The Transcripts of the Stenographic Notes disclose the following:
Justice De Castro:
149
Let's go back to the duty of the conscientious objector to refer. ..
Senior State Solicitor Hilbay:
Yes, Justice.
Justice De Castro:
... which you are discussing awhile ago with Justice Abad. What is the compelling State
interest in imposing this duty to refer to a conscientious objector which refuses to do so
because of his religious belief?
Senior State Solicitor Hilbay:
Ahh, Your Honor, ..
Justice De Castro:
What is the compelling State interest to impose this burden?
Senior State Solicitor Hilbay:
In the first place, Your Honor, I don't believe that the standard is a compelling State interest,
this is an ordinary health legislation involving professionals. This is not a free speech matter
or a pure free exercise matter. This is a regulation by the State of the relationship between
medical doctors and their patients.231
Resultantly, the Court finds no compelling state interest which would limit the free exercise
clause of the conscientious objectors, however few in number. Only the prevention of an
immediate and grave danger to the security and welfare of the community can justify the
infringement of religious freedom. If the government fails to show the seriousness and
immediacy of the threat, State intrusion is constitutionally unacceptable.232
Freedom of religion means more than just the freedom to believe. It also means the freedom
to act or not to act according to what one believes. And this freedom is violated when one is
compelled to act against one's belief or is prevented from acting according to one's belief.233
Apparently, in these cases, there is no immediate danger to the life or health of an individual
in the perceived scenario of the subject provisions. After all, a couple who plans the timing,
number and spacing of the birth of their children refers to a future event that is contingent
on whether or not the mother decides to adopt or use the information, product, method or
supply given to her or whether she even decides to become pregnant at all. On the other
hand, the burden placed upon those who object to contraceptive use is immediate and occurs
the moment a patient seeks consultation on reproductive health matters.
Moreover, granting that a compelling interest exists to justify the infringement of the
conscientious objector's religious freedom, the respondents have failed to demonstrate "the
gravest abuses, endangering paramount interests" which could limit or override a person's
fundamental right to religious freedom. Also, the respondents have not presented any
government effort exerted to show that the means it takes to achieve its legitimate state
objective is the least intrusive means.234 Other than the assertion that the act of referring
would only be momentary, considering that the act of referral by a conscientious objector is
the very action being contested as violative of religious freedom, it behooves the respondents
to demonstrate that no other means can be undertaken by the State to achieve its objective
without violating the rights of the conscientious objector. The health concerns of women may
still be addressed by other practitioners who may perform reproductive health-related
procedures with open willingness and motivation. Suffice it to say, a person who is forced to
perform an act in utter reluctance deserves the protection of the Court as the last vanguard
of constitutional freedoms.
At any rate, there are other secular steps already taken by the Legislature to ensure that the
right to health is protected. Considering other legislations as they stand now, R.A . No. 4 729
or the Contraceptive Act, R.A. No. 6365 or "The Population Act of the Philippines" and R.A.
No. 9710, otherwise known as "The Magna Carta of Women," amply cater to the needs of
women in relation to health services and programs. The pertinent provision of Magna Carta
on comprehensive health services and programs for women, in fact, reads:
Section 17. Women's Right to Health. - (a) Comprehensive Health Services. - The State shall,
at all times, provide for a comprehensive, culture-sensitive, and gender-responsive health
services and programs covering all stages of a woman's life cycle and which addresses the
major causes of women's mortality and morbidity: Provided, That in the provision for
comprehensive health services, due respect shall be accorded to women's religious
convictions, the rights of the spouses to found a family in accordance with their religious
convictions, and the demands of responsible parenthood, and the right of women to protection
from hazardous drugs, devices, interventions, and substances.
Access to the following services shall be ensured:
(1) Maternal care to include pre- and post-natal services to address pregnancy
and infant health and nutrition;
(2) Promotion of breastfeeding;
(3) Responsible, ethical, legal, safe, and effective methods of family planning;
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 (4) Family and State collaboration in youth sexuality education and health
services without prejudice to the primary right and duty of parents to educate
their children;
(5) Prevention and management of reproductive tract infections, including
sexually transmitted diseases, HIV, and AIDS;
(6) Prevention and management of reproductive tract cancers like breast and
cervical cancers, and other gynecological conditions and disorders;
(7) Prevention of abortion and management of pregnancy-related
complications;
(8) In cases of violence against women and children, women and children
victims and survivors shall be provided with comprehensive health services that
include psychosocial, therapeutic, medical, and legal interventions and
assistance towards healing, recovery, and empowerment;
(9) Prevention and management of infertility and sexual dysfunction pursuant
to ethical norms and medical standards;
(10) Care of the elderly women beyond their child-bearing years; and
(11) Management, treatment, and intervention of mental health problems of
women and girls. In addition, healthy lifestyle activities are encouraged and
promoted through programs and projects as strategies in the prevention of
diseases.
(b) Comprehensive Health Information and Education. - The State shall provide women in all
sectors with appropriate, timely, complete, and accurate information and education on all the
above-stated aspects of women's health in government education and training programs, with
due regard to the following:
(1) The natural and primary right and duty of parents in the rearing of the
youth and the development of moral character and the right of children to be
brought up in an atmosphere of morality and rectitude for the enrichment and
strengthening of character;
(2) The formation of a person's sexuality that affirms human dignity; and
(3) Ethical, legal, safe, and effective family planning methods including fertility
awareness.
As an afterthought, Asst. Solicitor General Hilbay eventually replied that the compelling state
interest was "Fifteen maternal deaths per day, hundreds of thousands of unintended
pregnancies, lives changed, x x x."235 He, however, failed to substantiate this point by
concrete facts and figures from reputable sources.
The undisputed fact, however, is that the World Health Organization reported that the Filipino
maternal mortality rate dropped to 48 percent from 1990 to 2008, 236 although there was
still no RH Law at that time. Despite such revelation, the proponents still insist that such
number of maternal deaths constitute a compelling state interest.
Granting that there are still deficiencies and flaws in the delivery of social healthcare programs
for Filipino women, they could not be solved by a measure that puts an unwarrantable
stranglehold on religious beliefs in exchange for blind conformity.
Exception: Life Threatening Cases
All this notwithstanding, the Court properly recognizes a valid exception set forth in the law.
While generally healthcare service providers cannot be forced to render reproductive health
care procedures if doing it would contravene their religious beliefs, an exception must be
made in life-threatening cases that require the performance of emergency procedures. In
these situations, the right to life of the mother should be given preference, considering that
a referral by a medical practitioner would amount to a denial of service, resulting to
unnecessarily placing the life of a mother in grave danger. Thus, during the oral arguments,
Atty. Liban, representing CFC, manifested: "the forced referral clause that we are objecting
on grounds of violation of freedom of religion does not contemplate an emergency."237
In a conflict situation between the life of the mother and the life of a child, the doctor is
morally obliged always to try to save both lives. If, however, it is impossible, the resulting
death to one should not be deliberate. Atty. Noche explained:
Principle of Double-Effect. - May we please remind the principal author of the RH Bill in the
House of Representatives of the principle of double-effect wherein intentional harm on the life
of either the mother of the child is never justified to bring about a "good" effect. In a conflict
situation between the life of the child and the life of the mother, the doctor is morally obliged
always to try to save both lives. However, he can act in favor of one (not necessarily the
mother) when it is medically impossible to save both, provided that no direct harm is intended
to the other. If the above principles are observed, the loss of the child's life or the mother's
life is not intentional and, therefore, unavoidable. Hence, the doctor would not be guilty of
abortion or murder. The mother is never pitted against the child because both their lives are
equally valuable.238
Accordingly, if it is necessary to save the life of a mother, procedures endangering the life of
the child may be resorted to even if is against the religious sentiments of the medical
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practitioner. As quoted above, whatever burden imposed upon a medical practitioner in this
case would have been more than justified considering the life he would be able to save.
Family Planning Seminars
Anent the requirement imposed under Section 15239 as a condition for the issuance of a
marriage license, the Court finds the same to be a reasonable exercise of police power by the
government. A cursory reading of the assailed provision bares that the religious freedom of
the petitioners is not at all violated. All the law requires is for would-be spouses to attend a
seminar on parenthood, family planning breastfeeding and infant nutrition. It does not even
mandate the type of family planning methods to be included in the seminar, whether they be
natural or artificial. As correctly noted by the OSG, those who receive any information during
their attendance in the required seminars are not compelled to accept the information given
to them, are completely free to reject the information they find unacceptable, and retain the
freedom to decide on matters of family life without the intervention of the State.
4-The Family and the Right to Privacy
Petitioner CFC assails the RH Law because Section 23(a) (2) (i) thereof violates the provisions
of the Constitution by intruding into marital privacy and autonomy. It argues that it cultivates
disunity and fosters animosity in the family rather than promote its solidarity and total
development.240
The Court cannot but agree.
The 1987 Constitution is replete with provisions strengthening the family as it is the basic
social institution. In fact, one article, Article XV, is devoted entirely to the family.
ARTICLE XV
THE FAMILY
Section 1. The State recognizes the Filipino family as the foundation of the nation. Accordingly,
it shall strengthen its solidarity and actively promote its total development.
Section 2. Marriage, as an inviolable social institution, is the foundation of the family and shall
be protected by the State.
Section 3. The State shall defend:
The right of spouses to found a family in accordance with their religious convictions and the
demands of responsible parenthood;
The right of children to assistance, including proper care and nutrition, and special protection
from all forms of neglect, abuse, cruelty, exploitation and other conditions prejudicial to their
development;
The right of the family to a family living wage and income; and
The right of families or family assoc1at1ons to participate in the planning and implementation
of policies and programs that affect them.
In this case, the RH Law, in its not-so-hidden desire to control population growth, contains
provisions which tend to wreck the family as a solid social institution. It bars the husband
and/or the father from participating in the decision making process regarding their common
future progeny. It likewise deprives the parents of their authority over their minor daughter
simply because she is already a parent or had suffered a miscarriage.
The Family and Spousal Consent
Section 23(a) (2) (i) of the RH Law states:
The following acts are prohibited:
(a) Any health care service provider, whether public or private, who shall: ...
(2) refuse to perform legal and medically-safe reproductive health procedures on any person
of legal age on the ground of lack of consent or authorization of the following persons in the
following instances:
(i) Spousal consent in case of married persons: provided, That in case of disagreement, the
decision of the one undergoing the procedures shall prevail. [Emphasis supplied]
The above provision refers to reproductive health procedures like tubal litigation and
vasectomy which, by their very nature, should require mutual consent and decision between
the husband and the wife as they affect issues intimately related to the founding of a family.
Section 3, Art. XV of the Constitution espouses that the State shall defend the "right of the
spouses to found a family." One person cannot found a family. The right, therefore, is shared
by both spouses. In the same Section 3, their right "to participate in the planning and
implementation of policies and programs that affect them " is equally recognized.
The RH Law cannot be allowed to infringe upon this mutual decision-making. By giving
absolute authority to the spouse who would undergo a procedure, and barring the other
spouse from participating in the decision would drive a wedge between the husband and wife,
possibly result in bitter animosity, and endanger the marriage and the family, all for the sake
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of reducing the population. This would be a marked departure from the policy of the State to The Family and Parental Consent
protect marriage as an inviolable social institution.241
Equally deplorable is the debarment of parental consent in cases where the minor, who will
Decision-making involving a reproductive health procedure is a private matter which belongs be undergoing a procedure, is already a parent or has had a miscarriage. Section 7 of the RH
to the couple, not just one of them. Any decision they would reach would affect their future law provides:
as a family because the size of the family or the number of their children significantly matters.
The decision whether or not to undergo the procedure belongs exclusively to, and shared by, SEC. 7. Access to Family Planning. – x x x.
both spouses as one cohesive unit as they chart their own destiny. It is a constitutionally
guaranteed private right. Unless it prejudices the State, which has not shown any compelling No person shall be denied information and access to family planning services, whether natural
interest, the State should see to it that they chart their destiny together as one family. or artificial: Provided, That minors will not be allowed access to modern methods of family
planning without written consent from their parents or guardian/s except when the minor is
As highlighted by Justice Leonardo-De Castro, Section 19( c) of R.A. No. 9710, otherwise already a parent or has had a miscarriage.
known as the "Magna Carta for Women," provides that women shall have equal rights in all
matters relating to marriage and family relations, including the joint decision on the number There can be no other interpretation of this provision except that when a minor is already a
and spacing of their children. Indeed, responsible parenthood, as Section 3(v) of the RH Law parent or has had a miscarriage, the parents are excluded from the decision making process
states, is a shared responsibility between parents. Section 23(a)(2)(i) of the RH Law should of the minor with regard to family planning. Even if she is not yet emancipated, the parental
not be allowed to betray the constitutional mandate to protect and strengthen the family by authority is already cut off just because there is a need to tame population growth.
giving to only one spouse the absolute authority to decide whether to undergo reproductive
health procedure.242
It is precisely in such situations when a minor parent needs the comfort, care, advice, and
guidance of her own parents. The State cannot replace her natural mother and father when
The right to chart their own destiny together falls within the protected zone of marital privacy it comes to providing her needs and comfort. To say that their consent is no longer relevant
and such state intervention would encroach into the zones of spousal privacy guaranteed by is clearly anti-family. It does not promote unity in the family. It is an affront to the
the Constitution. In our jurisdiction, the right to privacy was first recognized in Marje v. constitutional mandate to protect and strengthen the family as an inviolable social institution.
Mutuc,243 where the Court, speaking through Chief Justice Fernando, held that "the right to
privacy as such is accorded recognition independently of its identification with liberty; in itself,
More alarmingly, it disregards and disobeys the constitutional mandate that "the natural and
it is fully deserving of constitutional protection."244 Marje adopted the ruling of the US
primary right and duty of parents in the rearing of the youth for civic efficiency and the
Supreme Court in Griswold v. Connecticut,245 where Justice William O. Douglas wrote:
development of moral character shall receive the support of the Government."247 In this
regard, Commissioner Bernas wrote:
We deal with a right of privacy older than the Bill of Rights -older than our political parties,
older than our school system. Marriage is a coming together for better or for worse, hopefully
The 1987 provision has added the adjective "primary" to modify the right of parents. It
enduring, and intimate to the degree of being sacred. It is an association that promotes a
imports the assertion that the right of parents is superior to that of the State.248 [Emphases
way of life, not causes; a harmony in living, not political faiths; a bilateral loyalty, not
supplied]
commercial or social projects. Yet it is an association for as noble a purpose as any involved
in our prior decisions.
To insist on a rule that interferes with the right of parents to exercise parental control over
their minor-child or the right of the spouses to mutually decide on matters which very well
Ironically, Griswold invalidated a Connecticut statute which made the use of contraceptives a
affect the very purpose of marriage, that is, the establishment of conjugal and family life,
criminal offense on the ground of its amounting to an unconstitutional invasion of the right to
would result in the violation of one's privacy with respect to his family. It would be dismissive
privacy of married persons. Nevertheless, it recognized the zone of privacy rightfully enjoyed
of the unique and strongly-held Filipino tradition of maintaining close family ties and violative
by couples. Justice Douglas in Grisworld wrote that "specific guarantees in the Bill of Rights
of the recognition that the State affords couples entering into the special contract of marriage
have penumbras, formed by emanations from those guarantees that help give them life and
to as one unit in forming the foundation of the family and society.
substance. Various guarantees create zones of privacy."246
The State cannot, without a compelling state interest, take over the role of parents in the
At any rate, in case of conflict between the couple, the courts will decide.
care and custody of a minor child, whether or not the latter is already a parent or has had a

153
miscarriage. Only a compelling state interest can justify a state substitution of their parental
authority.
First Exception: Access to Information
Whether with respect to the minor referred to under the exception provided in the second
paragraph of Section 7 or with respect to the consenting spouse under Section 23(a)(2)(i), a
distinction must be made. There must be a differentiation between access to information
about family planning services, on one hand, and access to the reproductive health procedures
and modern family planning methods themselves, on the other. Insofar as access to
information is concerned, the Court finds no constitutional objection to the acquisition of
information by the minor referred to under the exception in the second paragraph of Section
7 that would enable her to take proper care of her own body and that of her unborn child.
After all, Section 12, Article II of the Constitution mandates the State to protect both the life
of the mother as that of the unborn child. Considering that information to enable a person to
make informed decisions is essential in the protection and maintenance of ones' health, access
to such information with respect to reproductive health must be allowed. In this situation, the
fear that parents might be deprived of their parental control is unfounded because they are
not prohibited to exercise parental guidance and control over their minor child and assist her
in deciding whether to accept or reject the information received.
Second Exception: Life Threatening Cases
As in the case of the conscientious objector, an exception must be made in life-threatening
cases that require the performance of emergency procedures. In such cases, the life of the
minor who has already suffered a miscarriage and that of the spouse should not be put at
grave risk simply for lack of consent. It should be emphasized that no person should be denied
the appropriate medical care urgently needed to preserve the primordial right, that is, the
right to life.
In this connection, the second sentence of Section 23(a)(2)(ii)249 should be struck down. By
effectively limiting the requirement of parental consent to "only in elective surgical
procedures," it denies the parents their right of parental authority in cases where what is
involved are "non-surgical procedures." Save for the two exceptions discussed above, and in
the case of an abused child as provided in the first sentence of Section 23(a)(2)(ii), the
parents should not be deprived of their constitutional right of parental authority. To deny
them of this right would be an affront to the constitutional mandate to protect and strengthen
the family.
5 - Academic Freedom
It is asserted that Section 14 of the RH Law, in relation to Section 24 thereof, mandating the
teaching of Age-and Development-Appropriate Reproductive Health Education under threat of
fine and/or imprisonment violates the principle of academic freedom . According to the
petitioners, these provisions effectively force educational institutions to teach reproductive
health education even if they believe that the same is not suitable to be taught to their
students.250 Citing various studies conducted in the United States and statistical data
gathered in the country, the petitioners aver that the prevalence of contraceptives has led to
an increase of out-of-wedlock births; divorce and breakdown of families; the acceptance of
abortion and euthanasia; the "feminization of poverty"; the aging of society; and promotion
of promiscuity among the youth.251
At this point, suffice it to state that any attack on the validity of Section 14 of the RH Law is
premature because the Department of Education, Culture and Sports has yet to formulate a
curriculum on age-appropriate reproductive health education. One can only speculate on the
content, manner and medium of instruction that will be used to educate the adolescents and
whether they will contradict the religious beliefs of the petitioners and validate their
apprehensions. Thus, considering the premature nature of this particular issue, the Court
declines to rule on its constitutionality or validity.
At any rate, Section 12, Article II of the 1987 Constitution provides that the natural and
primary right and duty of parents in the rearing of the youth for civic efficiency and
development of moral character shall receive the support of the Government. Like the 1973
Constitution and the 1935 Constitution, the 1987 Constitution affirms the State recognition
of the invaluable role of parents in preparing the youth to become productive members of
society. Notably, it places more importance on the role of parents in the development of their
children by recognizing that said role shall be "primary," that is, that the right of parents in
upbringing the youth is superior to that of the State.252
It is also the inherent right of the State to act as parens patriae to aid parents in the moral
development of the youth. Indeed, the Constitution makes mention of the importance of
developing the youth and their important role in nation building.253 Considering that Section
14 provides not only for the age-appropriate-reproductive health education, but also for
values formation; the development of knowledge and skills in self-protection against
discrimination; sexual abuse and violence against women and children and other forms of
gender based violence and teen pregnancy; physical, social and emotional changes in
adolescents; women's rights and children's rights; responsible teenage behavior; gender and
development; and responsible parenthood, and that Rule 10, Section 11.01 of the RH-IRR
and Section 4(t) of the RH Law itself provides for the teaching of responsible teenage
behavior, gender sensitivity and physical and emotional changes among adolescents - the
Court finds that the legal mandate provided under the assailed provision supplements, rather
than supplants, the rights and duties of the parents in the moral development of their children.
Furthermore, as Section 14 also mandates that the mandatory reproductive health education
program shall be developed in conjunction with parent-teacher-community associations,
school officials and other interest groups, it could very well be said that it will be in line with
the religious beliefs of the petitioners. By imposing such a condition, it becomes apparent that
154
the petitioners' contention that Section 14 violates Article XV, Section 3(1) of the Constitution
is without merit.254
While the Court notes the possibility that educators might raise their objection to their
participation in the reproductive health education program provided under Section 14 of the
RH Law on the ground that the same violates their religious beliefs, the Court reserves its
judgment should an actual case be filed before it.
6 - Due Process
The petitioners contend that the RH Law suffers from vagueness and, thus violates the due
process clause of the Constitution. According to them, Section 23 (a)(l) mentions a "private
health service provider" among those who may be held punishable but does not define who
is a "private health care service provider." They argue that confusion further results since
Section 7 only makes reference to a "private health care institution."
The petitioners also point out that Section 7 of the assailed legislation exempts hospitals
operated by religious groups from rendering reproductive health service and modern family
planning methods. It is unclear, however, if these institutions are also exempt from giving
reproductive health information under Section 23(a)(l), or from rendering reproductive health
procedures under Section 23(a)(2).
Finally, it is averred that the RH Law punishes the withholding, restricting and providing of
incorrect information, but at the same time fails to define "incorrect information."
The arguments fail to persuade.
A statute or act suffers from the defect of vagueness when it lacks comprehensible standards
that men of common intelligence must necessarily guess its meaning and differ as to its
application. It is repugnant to the Constitution in two respects: (1) it violates due process for
failure to accord persons, especially the parties targeted by it, fair notice of the conduct to
avoid; and (2) it leaves law enforcers unbridled discretion in carrying out its provisions and
becomes an arbitrary flexing of the Government muscle.255 Moreover, in determining
whether the words used in a statute are vague, words must not only be taken in accordance
with their plain meaning alone, but also in relation to other parts of the statute. It is a rule
that every part of the statute must be interpreted with reference to the context, that is, every
part of it must be construed together with the other parts and kept subservient to the general
intent of the whole enactment.256
As correctly noted by the OSG, in determining the definition of "private health care service
provider," reference must be made to Section 4(n) of the RH Law which defines a "public
health service provider," viz:
(n) Public health care service provider refers to: (1) public health care institution, which is
duly licensed and accredited and devoted primarily to the maintenance and operation of
facilities for health promotion, disease prevention, diagnosis, treatment and care of
individuals suffering from illness, disease, injury, disability or deformity, or in need of
obstetrical or other medical and nursing care; (2) public health care professional, who is a
doctor of medicine, a nurse or a midvvife; (3) public health worker engaged in the delivery of
health care services; or (4) barangay health worker who has undergone training programs
under any accredited government and NGO and who voluntarily renders primarily health care
services in the community after having been accredited to function as such by the local health
board in accordance with the guidelines promulgated by the Department of Health (DOH) .
Further, the use of the term "private health care institution" in Section 7 of the law, instead
of "private health care service provider," should not be a cause of confusion for the obvious
reason that they are used synonymously.
The Court need not belabor the issue of whether the right to be exempt from being obligated
to render reproductive health service and modem family planning methods, includes
exemption from being obligated to give reproductive health information and to render
reproductive health procedures. Clearly, subject to the qualifications and exemptions earlier
discussed, the right to be exempt from being obligated to render reproductive health service
and modem family planning methods, necessarily includes exemption from being obligated to
give reproductive health information and to render reproductive health procedures. The terms
"service" and "methods" are broad enough to include the providing of information and the
rendering of medical procedures.
The same can be said with respect to the contention that the RH Law punishes health care
service providers who intentionally withhold, restrict and provide incorrect information
regarding reproductive health programs and services. For ready reference, the assailed
provision is hereby quoted as follows:
SEC. 23. Prohibited Acts. - The following acts are prohibited:
(a) Any health care service provider, whether public or private, who shall:
(1) Knowingly withhold information or restrict the dissemination thereof, and/ or intentionally
provide incorrect information regarding programs and services on reproductive health
including the right to informed choice and access to a full range of legal, medically-safe, non-
abortifacient and effective family planning methods;
From its plain meaning, the word "incorrect" here denotes failing to agree with a copy or
model or with established rules; inaccurate, faulty; failing to agree with the requirements of
duty, morality or propriety; and failing to coincide with the truth. 257 On the other hand, the
word "knowingly" means with awareness or deliberateness that is intentional.258 Used
together in relation to Section 23(a)(l), they connote a sense of malice and ill motive to
155
mislead or misrepresent the public as to the nature and effect of programs and services on
reproductive health. Public health and safety demand that health care service providers give
their honest and correct medical information in accordance with what is acceptable in medical
practice. While health care service providers are not barred from expressing their own
personal opinions regarding the programs and services on reproductive health, their right
must be tempered with the need to provide public health and safety. The public deserves no
less.
7-Egual Protection
The petitioners also claim that the RH Law violates the equal protection clause under the
Constitution as it discriminates against the poor because it makes them the primary target of
the government program that promotes contraceptive use . They argue that, rather than
promoting reproductive health among the poor, the RH Law introduces contraceptives that
would effectively reduce the number of the poor. Their bases are the various provisions in the
RH Law dealing with the poor, especially those mentioned in the guiding principles259 and
definition of terms260 of the law.
They add that the exclusion of private educational institutions from the mandatory
reproductive health education program imposed by the RH Law renders it unconstitutional.
In Biraogo v. Philippine Truth Commission,261 the Court had the occasion to expound on the
concept of equal protection. Thus:
One of the basic principles on which this government was founded is that of the equality of
right which is embodied in Section 1, Article III of the 1987 Constitution. The equal protection
of the laws is embraced in the concept of due process, as every unfair discrimination offends
the requirements of justice and fair play. It has been embodied in a separate clause, however,
to provide for a more specific guaranty against any form of undue favoritism or hostility from
the government. Arbitrariness in general may be challenged on the basis of the due process
clause. But if the particular act assailed partakes of an unwarranted partiality or prejudice,
the sharper weapon to cut it down is the equal protection clause.
"According to a long line of decisions, equal protection simply requires that all persons or
things similarly situated should be treated alike, both as to rights conferred and
responsibilities imposed." It "requires public bodies and inst itutions to treat similarly situated
individuals in a similar manner." "The purpose of the equal protection clause is to secure every
person within a state's jurisdiction against intentional and arbitrary discrimination, whether
occasioned by the express terms of a statue or by its improper execution through the state's
duly constituted authorities." "In other words, the concept of equal justice under the law
requires the state to govern impartially, and it may not draw distinctions between individuals
solely on differences that are irrelevant to a legitimate governmental objective."
The equal protection clause is aimed at all official state actions, not just those of the
legislature. Its inhibitions cover all the departments of the government including the political
and executive departments, and extend to all actions of a state denying equal protection of
the laws, through whatever agency or whatever guise is taken.
It, however, does not require the universal application of the laws to all persons or things
without distinction. What it simply requires is equality among equals as determined according
to a valid classification. Indeed, the equal protection clause permits classification. Such
classification, however, to be valid must pass the test of reasonableness. The test has four
requisites: (1) The classification rests on substantial distinctions; (2) It is germane to the
purpose of the law; (3) It is not limited to existing conditions only; and (4) It applies equally
to all members of the same class. "Superficial differences do not make for a valid
classification."
For a classification to meet the requirements of constitutionality, it must include or embrace
all persons who naturally belong to the class. "The classification will be regarded as invalid if
all the members of the class are not similarly treated, both as to rights conferred and
obligations imposed. It is not necessary that the classification be made with absolute
symmetry, in the sense that the members of the class should possess the same characteristics
in equal degree. Substantial similarity will suffice; and as long as this is achieved, all those
covered by the classification are to be treated equally. The mere fact that an individual
belonging to a class differs from the other members, as long as that class is substantially
distinguishable from all others, does not justify the non-application of the law to him."
The classification must not be based on existing circumstances only, or so constituted as to
preclude addition to the number included in the class. It must be of such a nature as to
embrace all those who may thereafter be in similar circumstances and conditions. It must not
leave out or "underinclude" those that should otherwise fall into a certain classification.
[Emphases supplied; citations excluded]
To provide that the poor are to be given priority in the government's reproductive health care
program is not a violation of the equal protection clause. In fact, it is pursuant to Section 11,
Article XIII of the Constitution which recognizes the distinct necessity to address the needs of
the underprivileged by providing that they be given priority in addressing the health
development of the people. Thus:
Section 11. The State shall adopt an integrated and comprehensive approach to health
development which shall endeavor to make essential goods, health and other social services
available to all the people at affordable cost. There shall be priority for the needs of the
underprivileged, sick, elderly, disabled, women, and children. The State shall endeavor to
provide free medical care to paupers.
It should be noted that Section 7 of the RH Law prioritizes poor and marginalized couples who
are suffering from fertility issues and desire to have children. There is, therefore, no merit to
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the contention that the RH Law only seeks to target the poor to reduce their number. While
the RH Law admits the use of contraceptives, it does not, as elucidated above, sanction
abortion. As Section 3(1) explains, the "promotion and/or stabilization of the population
growth rate is incidental to the advancement of reproductive health."
Moreover, the RH Law does not prescribe the number of children a couple may have and does
not impose conditions upon couples who intend to have children. While the petitioners surmise
that the assailed law seeks to charge couples with the duty to have children only if they would
raise them in a truly humane way, a deeper look into its provisions shows that what the law
seeks to do is to simply provide priority to the poor in the implementation of government
programs to promote basic reproductive health care.
With respect to the exclusion of private educational institutions from the mandatory
reproductive health education program under Section 14, suffice it to state that the mere fact
that the children of those who are less fortunate attend public educational institutions does
not amount to substantial distinction sufficient to annul the assailed provision. On the other
hand, substantial distinction rests between public educational institutions and private
educational institutions, particularly because there is a need to recognize the academic
freedom of private educational institutions especially with respect to religious instruction and
to consider their sensitivity towards the teaching of reproductive health education.
8-Involuntary Servitude
The petitioners also aver that the RH Law is constitutionally infirm as it violates the
constitutional prohibition against involuntary servitude. They posit that Section 17 of the
assailed legislation requiring private and non-government health care service providers to
render forty-eight (48) hours of pro bono reproductive health services, actually amounts to
involuntary servitude because it requires medical practitioners to perform acts against their
will.262
The OSG counters that the rendition of pro bono services envisioned in Section 17 can hardly
be considered as forced labor analogous to slavery, as reproductive health care service
providers have the discretion as to the manner and time of giving pro bono services.
Moreover, the OSG points out that the imposition is within the powers of the government, the
accreditation of medical practitioners with PhilHealth being a privilege and not a right.
The point of the OSG is well-taken.
It should first be mentioned that the practice of medicine is undeniably imbued with public
interest that it is both a power and a duty of the State to control and regulate it in order to
protect and promote the public welfare. Like the legal profession, the practice of medicine is
not a right but a privileged burdened with conditions as it directly involves the very lives of
the people. A fortiori, this power includes the power of Congress263 to prescribe the
qualifications for the practice of professions or trades which affect the public welfare, the
public health, the public morals, and the public safety; and to regulate or control such
professions or trades, even to the point of revoking such right altogether.264
Moreover, as some petitioners put it, the notion of involuntary servitude connotes the
presence of force, threats, intimidation or other similar means of coercion and compulsion.265
A reading of the assailed provision, however, reveals that it only encourages private and non-
government reproductive healthcare service providers to render pro bono service. Other than
non-accreditation with PhilHealth, no penalty is imposed should they choose to do otherwise.
Private and non-government reproductive healthcare service providers also enjoy the liberty
to choose which kind of health service they wish to provide, when, where and how to provide
it or whether to provide it all. Clearly, therefore, no compulsion, force or threat is made upon
them to render pro bono service against their will. While the rendering of such service was
made a prerequisite to accreditation with PhilHealth, the Court does not consider the same to
be an unreasonable burden, but rather, a necessary incentive imposed by Congress in the
furtherance of a perceived legitimate state interest.
Consistent with what the Court had earlier discussed, however, it should be emphasized that
conscientious objectors are exempt from this provision as long as their religious beliefs and
convictions do not allow them to render reproductive health service, pro bona or otherwise.
9-Delegation of Authority to the FDA
The petitioners likewise question the delegation by Congress to the FDA of the power to
determine whether or not a supply or product is to be included in the Essential Drugs List
(EDL).266
The Court finds nothing wrong with the delegation. The FDA does not only have the power
but also the competency to evaluate, register and cover health services and methods. It is
the only government entity empowered to render such services and highly proficient to do so.
It should be understood that health services and methods fall under the gamut of terms that
are associated with what is ordinarily understood as "health products."
In this connection, Section 4 of R.A. No. 3 720, as amended by R.A. No. 9711 reads:
SEC. 4. To carry out the provisions of this Act, there is hereby created an office to be called
the Food and Drug Administration (FDA) in the Department of Health (DOH). Said
Administration shall be under the Office of the Secretary and shall have the following
functions, powers and duties:
"(a) To administer the effective implementation of this Act and of the rules and
regulations issued pursuant to the same;
"(b) To assume primary jurisdiction in the collection of samples of health products;
157
 "(c) To analyze and inspect health products in connection with the implementation of
this Act;
"(d) To establish analytical data to serve as basis for the preparation of health products
standards, and to recommend standards of identity, purity, safety, efficacy, quality
and fill of container;
"(e) To issue certificates of compliance with technical requirements to serve as basis
for the issuance of appropriate authorization and spot-check for compliance with
regulations regarding operation of manufacturers, importers, exporters, distributors,
wholesalers, drug outlets, and other establishments and facilities of health products,
as determined by the FDA;
"x x x
"(h) To conduct appropriate tests on all applicable health products prior to the issuance
of appropriate authorizations to ensure safety, efficacy, purity, and quality;
"(i) To require all manufacturers, traders, distributors, importers, exporters,
wholesalers, retailers, consumers, and non-consumer users of health products to
report to the FDA any incident that reasonably indicates that said product has caused
or contributed to the death, serious illness or serious injury to a consumer, a patient,
or any person;
"(j) To issue cease and desist orders motu propio or upon verified complaint for health
products, whether or not registered with the FDA Provided, That for registered health
products, the cease and desist order is valid for thirty (30) days and may be extended
for sixty ( 60) days only after due process has been observed;
"(k) After due process, to order the ban, recall, and/or withdrawal of any health
product found to have caused death, serious illness or serious injury to a consumer or
patient, or is found to be imminently injurious, unsafe, dangerous, or grossly
deceptive, and to require all concerned to implement the risk management plan which
is a requirement for the issuance of the appropriate authorization;
x x x.
As can be gleaned from the above, the functions, powers and duties of the FDA are specific
to enable the agency to carry out the mandates of the law. Being the country's premiere and
sole agency that ensures the safety of food and medicines available to the public, the FDA
was equipped with the necessary powers and functions to make it effective. Pursuant to the
principle of necessary implication, the mandate by Congress to the FDA to ensure public health
and safety by permitting only food and medicines that are safe includes "service" and
"methods." From the declared policy of the RH Law, it is clear that Congress intended that
the public be given only those medicines that are proven medically safe, legal, non-
abortifacient, and effective in accordance with scientific and evidence-based medical research
standards. The philosophy behind the permitted delegation was explained in Echagaray v.
Secretary of Justice,267 as follows:
The reason is the increasing complexity of the task of the government and the growing
inability of the legislature to cope directly with the many problems demanding its attention.
The growth of society has ramified its activities and created peculiar and sophisticated
problems that the legislature cannot be expected reasonably to comprehend. Specialization
even in legislation has become necessary. To many of the problems attendant upon present
day undertakings, the legislature may not have the competence, let alone the interest and
the time, to provide the required direct and efficacious, not to say specific solutions.
10- Autonomy of Local Governments and the Autonomous Region
of Muslim Mindanao (ARMM)
As for the autonomy of local governments, the petitioners claim that the RH Law infringes
upon the powers devolved to local government units (LGUs) under Section 17 of the Local
Government Code. Said Section 17 vested upon the LGUs the duties and functions pertaining
to the delivery of basic services and facilities, as follows:
SECTION 17. Basic Services and Facilities. –
(a) Local government units shall endeavor to be self-reliant and shall continue
exercising the powers and discharging the duties and functions currently vested upon
them. They shall also discharge the functions and responsibilities of national agencies
and offices devolved to them pursuant to this Code. Local government units shall
likewise exercise such other powers and discharge such other functions and
responsibilities as are necessary, appropriate, or incidental to efficient and effective
provision of the basic services and facilities enumerated herein.
(b) Such basic services and facilities include, but are not limited to, x x x.
While the aforementioned provision charges the LGUs to take on the functions and
responsibilities that have already been devolved upon them from the national agencies
on the aspect of providing for basic services and facilities in their respective
jurisdictions, paragraph (c) of the same provision provides a categorical exception of
cases involving nationally-funded projects, facilities, programs and services.268 Thus:
(c) Notwithstanding the provisions of subsection (b) hereof, public works and
infrastructure projects and other facilities, programs and services funded by the
National Government under the annual General Appropriations Act, other special laws,
pertinent executive orders, and those wholly or partially funded from foreign sources,
158
 are not covered under this Section, except in those cases where the local government
unit concerned is duly designated as the implementing agency for such projects,
facilities, programs and services. [Emphases supplied]
The essence of this express reservation of power by the national government is that, unless
an LGU is particularly designated as the implementing agency, it has no power over a program
for which funding has been provided by the national government under the annual general
appropriations act, even if the program involves the delivery of basic services within the
jurisdiction of the LGU.269 A complete relinquishment of central government powers on the
matter of providing basic facilities and services cannot be implied as the Local Government
Code itself weighs against it.270
In this case, a reading of the RH Law clearly shows that whether it pertains to the
establishment of health care facilities,271 the hiring of skilled health professionals,272 or the
training of barangay health workers,273 it will be the national government that will provide
for the funding of its implementation. Local autonomy is not absolute. The national
government still has the say when it comes to national priority programs which the local
government is called upon to implement like the RH Law.
Moreover, from the use of the word "endeavor," the LG Us are merely encouraged to provide
these services. There is nothing in the wording of the law which can be construed as making
the availability of these services mandatory for the LGUs. For said reason, it cannot be said
that the RH Law amounts to an undue encroachment by the national government upon the
autonomy enjoyed by the local governments.
The ARMM
The fact that the RH Law does not intrude in the autonomy of local governments can be
equally applied to the ARMM. The RH Law does not infringe upon its autonomy. Moreover,
Article III, Sections 6, 10 and 11 of R.A. No. 9054, or the organic act of the ARMM, alluded
to by petitioner Tillah to justify the exemption of the operation of the RH Law in the
autonomous region, refer to the policy statements for the guidance of the regional
government. These provisions relied upon by the petitioners simply delineate the powers that
may be exercised by the regional government, which can, in no manner, be characterized as
an abdication by the State of its power to enact legislation that would benefit the general
welfare. After all, despite the veritable autonomy granted the ARMM, the Constitution and the
supporting jurisprudence, as they now stand, reject the notion of imperium et imperio in the
relationship between the national and the regional governments.274 Except for the express
and implied limitations imposed on it by the Constitution, Congress cannot be restricted to
exercise its inherent and plenary power to legislate on all subjects which extends to all matters
of general concern or common interest.275
11 - Natural Law
With respect to the argument that the RH Law violates natural law,276 suffice it to say that
the Court does not duly recognize it as a legal basis for upholding or invalidating a law. Our
only guidepost is the Constitution. While every law enacted by man emanated from what is
perceived as natural law, the Court is not obliged to see if a statute, executive issuance or
ordinance is in conformity to it. To begin with, it is not enacted by an acceptable legitimate
body. Moreover, natural laws are mere thoughts and notions on inherent rights espoused by
theorists, philosophers and theologists. The jurists of the philosophical school are interested
in the law as an abstraction, rather than in the actual law of the past or present.277 Unless,
a natural right has been transformed into a written law, it cannot serve as a basis to strike
down a law. In Republic v. Sandiganbayan,278 the very case cited by the petitioners, it was
explained that the Court is not duty-bound to examine every law or action and whether it
conforms with both the Constitution and natural law. Rather, natural law is to be used
sparingly only in the most peculiar of circumstances involving rights inherent to man where
no law is applicable.279
At any rate, as earlier expounded, the RH Law does not sanction the taking away of life. It
does not allow abortion in any shape or form. It only seeks to enhance the population control
program of the government by providing information and making non-abortifacient
contraceptives more readily available to the public, especially to the poor.
Facts and Fallacies
and the Wisdom of the Law
In general, the Court does not find the RH Law as unconstitutional insofar as it seeks to
provide access to medically-safe, non-abortifacient, effective, legal, affordable, and quality
reproductive healthcare services, methods, devices, and supplies. As earlier pointed out,
however, the religious freedom of some sectors of society cannot be trampled upon in pursuit
of what the law hopes to achieve. After all, the Constitutional safeguard to religious freedom
is a recognition that man stands accountable to an authority higher than the State.
In conformity with the principle of separation of Church and State, one religious group cannot
be allowed to impose its beliefs on the rest of the society. Philippine modem society leaves
enough room for diversity and pluralism. As such, everyone should be tolerant and open-
minded so that peace and harmony may continue to reign as we exist alongside each other.
As healthful as the intention of the RH Law may be, the idea does not escape the Court that
what it seeks to address is the problem of rising poverty and unemployment in the country.
Let it be said that the cause of these perennial issues is not the large population but the
unequal distribution of wealth. Even if population growth is controlled, poverty will remain as
long as the country's wealth remains in the hands of the very few.
At any rate, population control may not be beneficial for the country in the long run. The
European and Asian countries, which embarked on such a program generations ago , are now
159
burdened with ageing populations. The number of their young workers is dwindling with
adverse effects on their economy. These young workers represent a significant human capital
which could have helped them invigorate, innovate and fuel their economy. These countries
are now trying to reverse their programs, but they are still struggling. For one, Singapore,
even with incentives, is failing.
And in this country, the economy is being propped up by remittances from our Overseas
Filipino Workers. This is because we have an ample supply of young able-bodied workers.
What would happen if the country would be weighed down by an ageing population and the
fewer younger generation would not be able to support them? This would be the situation
when our total fertility rate would go down below the replacement level of two (2) children
per woman.280
Indeed, at the present, the country has a population problem, but the State should not use
coercive measures (like the penal provisions of the RH Law against conscientious objectors)
to solve it. Nonetheless, the policy of the Court is non-interference in the wisdom of a law.
x x x. But this Court cannot go beyond what the legislature has laid down. Its duty is to say
what the law is as enacted by the lawmaking body. That is not the same as saying what the
law should be or what is the correct rule in a given set of circumstances. It is not the province
of the judiciary to look into the wisdom of the law nor to question the policies adopted by the
legislative branch. Nor is it the business of this Tribunal to remedy every unjust situation that
may arise from the application of a particular law. It is for the legislature to enact remedial
legislation if that would be necessary in the premises. But as always, with apt judicial caution
and cold neutrality, the Court must carry out the delicate function of interpreting the law,
guided by the Constitution and existing legislation and mindful of settled jurisprudence. The
Court's function is therefore limited, and accordingly, must confine itself to the judicial task
of saying what the law is, as enacted by the lawmaking body.281
Be that as it may, it bears reiterating that the RH Law is a mere compilation and enhancement
of the prior existing contraceptive and reproductive health laws, but with coercive measures.
Even if the Court decrees the RH Law as entirely unconstitutional, there will still be the
Population Act (R.A. No. 6365), the Contraceptive Act (R.A. No. 4729) and the reproductive
health for women or The Magna Carta of Women (R.A. No. 9710), sans the coercive provisions
of the assailed legislation. All the same, the principle of "no-abortion" and "non-coercion" in
the adoption of any family planning method should be maintained.
WHEREFORE, the petitions are PARTIALLY GRANTED. Accordingly, the Court declares R.A. No.
10354 as NOT UNCONSTITUTIONAL except with respect to the following provisions which are
The Status Quo Ante Order issued by the Court on March 19, 2013 as extended by its Order,
declared UNCONSTITUTIONAL:
dated July 16, 2013 , is hereby LIFTED, insofar as the provisions of R.A. No. 10354 which
have been herein declared as constitutional.
1) Section 7 and the corresponding provision in the RH-IRR insofar as they: a) require
private health facilities and non-maternity specialty hospitals and hospitals owned and
SO ORDERED.
operated by a religious group to refer patients, not in an emergency or life-threatening
case, as defined under Republic Act No. 8344, to another health facility which is
conveniently accessible; and b) allow minor-parents or minors who have suffered a
miscarriage access to modem methods of family planning without written consent from
their parents or guardian/s;
2) Section 23(a)(l) and the corresponding provision in the RH-IRR, particularly Section
5 .24 thereof, insofar as they punish any healthcare service provider who fails and or
refuses to disseminate information regarding programs and services on reproductive
health regardless of his or her religious beliefs.
3) Section 23(a)(2)(i) and the corresponding provision in the RH-IRR insofar as they
allow a married individual, not in an emergency or life-threatening case, as defined
under Republic Act No. 8344, to undergo reproductive health procedures without the
consent of the spouse;
4) Section 23(a)(2)(ii) and the corresponding provision in the RH-IRR insofar as they
limit the requirement of parental consent only to elective surgical procedures.
5) Section 23(a)(3) and the corresponding provision in the RH-IRR, particularly Section
5.24 thereof, insofar as they punish any healthcare service provider who fails and/or
refuses to refer a patient not in an emergency or life-threatening case, as defined
under Republic Act No. 8344, to another health care service provider within the same
facility or one which is conveniently accessible regardless of his or her religious beliefs;
6) Section 23(b) and the corresponding provision in the RH-IRR, particularly Section
5 .24 thereof, insofar as they punish any public officer who refuses to support
reproductive health programs or shall do any act that hinders the full implementation
of a reproductive health program, regardless of his or her religious beliefs;
7) Section 17 and the corresponding prov1s10n in the RH-IRR regarding the rendering
of pro bona reproductive health service in so far as they affect the conscientious
objector in securing PhilHealth accreditation; and
8) Section 3.0l(a) and Section 3.01 G) of the RH-IRR, which added the qualifier
"primarily" in defining abortifacients and contraceptives, as they are ultra vires and,
therefore, null and void for contravening Section 4(a) of the RH Law and violating
Section 12, Article II of the Constitution.
160
G.R. No. 128845 June 1, 2000
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner,
vs.
HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and
Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the Acting
Secretary of Labor and Employment; DR. BRIAN MACCAULEY in his capacity as the
Superintendent of International School-Manila; and INTERNATIONAL SCHOOL, INC.,
respondents.
KAPUNAN, J.:
Receiving salaries less than their counterparts hired abroad, the local-hires of private
respondent School, mostly Filipinos, cry discrimination. We agree. That the local-hires are
paid more than their colleagues in other schools is, of course, beside the point. The point is
that employees should be given equal pay for work of equal value. That is a principle long
honored in this jurisdiction. That is a principle that rests on fundamental notions of justice.
That is the principle we uphold today.1âwphi1.nêt
Private respondent International School, Inc. (the School, for short), pursuant to Presidential
Decree 732, is a domestic educational institution established primarily for dependents of
foreign diplomatic personnel and other temporary residents.1 To enable the School to
continue carrying out its educational program and improve its standard of instruction, Section
2(c) of the same decree authorizes the School to employ its own teaching and management
personnel selected by it either locally or abroad, from Philippine or other nationalities, such
personnel being exempt from otherwise applicable laws and regulations attending their
employment, except laws that have been or will be enacted for the protection of employees.
Accordingly, the School hires both foreign and local teachers as members of its faculty,
classifying the same into two: (1) foreign-hires and (2) local-hires. The School employs four
tests to determine whether a faculty member should be classified as a foreign-hire or a local
hire:
a. What is one's domicile?
b. Where is one's home economy?
c. To which country does one owe economic allegiance?
d. Was the individual hired abroad specifically to work in the School and was the School
responsible for bringing that individual to the Philippines?2
Should the answer to any of these queries point to the Philippines, the faculty member is
classified as a local hire; otherwise, he or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded local-hires.1avvphi1 These
include housing, transportation, shipping costs, taxes, and home leave travel allowance.
Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires.
The School justifies the difference on two "significant economic disadvantages" foreign-hires
have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The School
explains:
A foreign-hire would necessarily have to uproot himself from his home country, leave his
family and friends, and take the risk of deviating from a promising career path — all for the
purpose of pursuing his profession as an educator, but this time in a foreign land. The new
foreign hire is faced with economic realities: decent abode for oneself and/or for one's family,
effective means of transportation, allowance for the education of one's children, adequate
insurance against illness and death, and of course the primary benefit of a basic
salary/retirement compensation.
Because of a limited tenure, the foreign hire is confronted again with the same economic
reality after his term: that he will eventually and inevitably return to his home country where
he will have to confront the uncertainty of obtaining suitable employment after along period
in a foreign land.
The compensation scheme is simply the School's adaptive measure to remain competitive on
an international level in terms of attracting competent professionals in the field of
international education.3
When negotiations for a new collective bargaining agreement were held on June 1995,
petitioner International School Alliance of Educators, "a legitimate labor union and the
collective bargaining representative of all faculty members"4 of the School, contested the
difference in salary rates between foreign and local-hires. This issue, as well as the question
of whether foreign-hires should be included in the appropriate bargaining unit, eventually
caused a deadlock between the parties.
On September 7, 1995, petitioner filed a notice of strike. The failure of the National
Conciliation and Mediation Board to bring the parties to a compromise prompted the
Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute. On
June 10, 1996, the DOLE Acting Secretary, Crescenciano B. Trajano, issued an Order resolving
the parity and representation issues in favor of the School. Then DOLE Secretary Leonardo A.
Quisumbing subsequently denied petitioner's motion for reconsideration in an Order dated
March 19, 1997. Petitioner now seeks relief in this Court.
161
Petitioner claims that the point-of-hire classification employed by the School is discriminatory
to Filipinos and that the grant of higher salaries to foreign-hires constitutes racial
discrimination.
The School disputes these claims and gives a breakdown of its faculty members, numbering
38 in all, with nationalities other than Filipino, who have been hired locally and classified as
local hires.5 The Acting Secretary of Labor found that these non-Filipino local-hires received
the same benefits as the Filipino local-hires.
The compensation package given to local-hires has been shown to apply to all, regardless of
race. Truth to tell, there are foreigners who have been hired locally and who are paid equally
as Filipino local hires.6
The Acting secretary upheld the point-of-hire classification for the distinction in salary rates:
The Principle "equal pay for equal work" does not find applications in the present case. The
international character of the School requires the hiring of foreign personnel to deal with
different nationalities and different cultures, among the student population.
We also take cognizance of the existence of a system of salaries and benefits accorded to
foreign hired personnel which system is universally recognized. We agree that certain
amenities have to be provided to these people in order to entice them to render their services
in the Philippines and in the process remain competitive in the international market.
Furthermore, we took note of the fact that foreign hires have limited contract of employment
unlike the local hires who enjoy security of tenure. To apply parity therefore, in wages and
other benefits would also require parity in other terms and conditions of employment which
include the employment which include the employment contract.
A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for salary
and professional compensation wherein the parties agree as follows:
All members of the bargaining unit shall be compensated only in accordance with Appendix C
hereof provided that the Superintendent of the School has the discretion to recruit and hire
expatriate teachers from abroad, under terms and conditions that are consistent with
accepted international practice.
Appendix C of said CBA further provides:
The new salary schedule is deemed at equity with the Overseas Recruited Staff (OSRS) salary
schedule. The 25% differential is reflective of the agreed value of system displacement and
contracted status of the OSRS as differentiated from the tenured status of Locally Recruited
Staff (LRS).
To our mind, these provisions demonstrate the parties' recognition of the difference in the
status of two types of employees, hence, the difference in their salaries.
The Union cannot also invoke the equal protection clause to justify its claim of parity. It is an
established principle of constitutional law that the guarantee of equal protection of the laws
is not violated by legislation or private covenants based on reasonable classification. A
classification is reasonable if it is based on substantial distinctions and apply to all members
of the same class. Verily, there is a substantial distinction between foreign hires and local
hires, the former enjoying only a limited tenure, having no amenities of their own in the
Philippines and have to be given a good compensation package in order to attract them to
join the teaching faculty of the School.7
We cannot agree.
That public policy abhors inequality and discrimination is beyond contention. Our Constitution
and laws reflect the policy against these evils. The Constitution8 in the Article on Social Justice
and Human Rights exhorts Congress to "give highest priority to the enactment of measures
that protect and enhance the right of all people to human dignity, reduce social, economic,
and political inequalities." The very broad Article 19 of the Civil Code requires every person,
"in the exercise of his rights and in the performance of his duties, [to] act with justice, give
everyone his due, and observe honesty and good faith.
International law, which springs from general principles of law,9 likewise proscribes
discrimination. General principles of law include principles of equity, 10 i.e., the general
principles of fairness and justice, based on the test of what is reasonable. 11 The Universal
Declaration of Human Rights, 12 the International Covenant on Economic, Social, and Cultural
Rights, 13 the International Convention on the Elimination of All Forms of Racial
Discrimination, 14 the Convention against Discrimination in Education, 15 the Convention
(No. 111) Concerning Discrimination in Respect of Employment and Occupation 16 — all
embody the general principle against discrimination, the very antithesis of fairness and
justice. The Philippines, through its Constitution, has incorporated this principle as part of its
national laws.
In the workplace, where the relations between capital and labor are often skewed in favor of
capital, inequality and discrimination by the employer are all the more reprehensible.
The Constitution 17 specifically provides that labor is entitled to "humane conditions of work."
These conditions are not restricted to the physical workplace — the factory, the office or the
field — but include as well the manner by which employers treat their employees.
The Constitution 18 also directs the State to promote "equality of employment opportunities
for all." Similarly, the Labor Code 19 provides that the State shall "ensure equal work
opportunities regardless of sex, race or creed." It would be an affront to both the spirit and
letter of these provisions if the State, in spite of its primordial obligation to promote and
162
ensure equal employment opportunities, closes its eyes to unequal and discriminatory terms
and conditions of employment. 20
Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article
135, for example, prohibits and penalizes 21 the payment of lesser compensation to a female
employee as against a male employee for work of equal value. Article 248 declares it an unfair
labor practice for an employer to discriminate in regard to wages in order to encourage or
discourage membership in any labor organization.
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article
7 thereof, provides:
The States Parties to the present Covenant recognize the right of everyone to the enjoyment
of just and favourable conditions of work, which ensure, in particular:
a. Remuneration which provides all workers, as a minimum, with:
(i) Fair wages and equal remuneration for work of equal value without distinction of any kind,
in particular women being guaranteed conditions of work not inferior to those enjoyed by
men, with equal pay for equal work;
xxx xxx xxx
The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal
truism of "equal pay for equal work." Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be paid similar salaries. 22 This
rule applies to the School, its "international character" notwithstanding.
The School contends that petitioner has not adduced evidence that local-hires perform work
equal to that of foreign-hires. 23 The Court finds this argument a little cavalier. If an employer
accords employees the same position and rank, the presumption is that these employees
perform equal work. This presumption is borne by logic and human experience. If the
employer pays one employee less than the rest, it is not for that employee to explain why he
receives less or why the others receive more. That would be adding insult to injury. The
employer has discriminated against that employee; it is for the employer to explain why the
employee is treated unfairly.
The employer in this case has failed to discharge this burden. There is no evidence here that
foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups
have similar functions and responsibilities, which they perform under similar working
conditions.
The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize
the distinction in salary rates without violating the principle of equal work for equal pay.
"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for services
performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is the
"[c]onsideration paid at regular intervals for the rendering of services." In Songco v. National
Labor Relations Commission, 24 we said that:
"salary" means a recompense or consideration made to a person for his pains or industry in
another man's business. Whether it be derived from "salarium," or more fancifully from "sal,"
the pay of the Roman soldier, it carries with it the fundamental idea of compensation for
services rendered. (Emphasis supplied.)
While we recognize the need of the School to attract foreign-hires, salaries should not be used
as an enticement to the prejudice of local-hires. The local-hires perform the same services as
foreign-hires and they ought to be paid the same salaries as the latter. For the same reason,
the "dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases
for the distinction in salary rates. The dislocation factor and limited tenure affecting foreign-
hires are adequately compensated by certain benefits accorded them which are not enjoyed
by local-hires, such as housing, transportation, shipping costs, taxes and home leave travel
allowances.
The Constitution enjoins the State to "protect the rights of workers and promote their
welfare," 25 "to afford labor full protection." 26 The State, therefore, has the right and duty
to regulate the relations between labor and capital. 27 These relations are not merely
contractual but are so impressed with public interest that labor contracts, collective bargaining
agreements included, must yield to the common good. 28 Should such contracts contain
stipulations that are contrary to public policy, courts will not hesitate to strike down these
stipulations.
In this case, we find the point-of-hire classification employed by respondent School to justify
the distinction in the salary rates of foreign-hires and local hires to be an invalid classification.
There is no reasonable distinction between the services rendered by foreign-hires and local-
hires. The practice of the School of according higher salaries to foreign-hires contravenes
public policy and, certainly, does not deserve the sympathy of this Court.1avvphi1
We agree, however, that foreign-hires do not belong to the same bargaining unit as the local-
hires.
A bargaining unit is "a group of employees of a given employer, comprised of all or less than
all of the entire body of employees, consistent with equity to the employer, indicate to be the
best suited to serve the reciprocal rights and duties of the parties under the collective
bargaining provisions of the law." 29 The factors in determining the appropriate collective
bargaining unit are (1) the will of the employees (Globe Doctrine); (2) affinity and unity of
163
the employees' interest, such as substantial similarity of work and duties, or similarity of
compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective
bargaining history; and (4) similarity of employment status. 30 The basic test of an asserted
bargaining unit's acceptability is whether or not it is fundamentally the combination which will
best assure to all employees the exercise of their collective bargaining rights. 31
It does not appear that foreign-hires have indicated their intention to be grouped together
with local-hires for purposes of collective bargaining. The collective bargaining history in the
School also shows that these groups were always treated separately. Foreign-hires have
limited tenure; local-hires enjoy security of tenure. Although foreign-hires perform similar
functions under the same working conditions as the local-hires, foreign-hires are accorded
certain benefits not granted to local-hires. These benefits, such as housing, transportation,
shipping costs, taxes, and home leave travel allowance, are reasonably related to their status
as foreign-hires, and justify the exclusion of the former from the latter. To include foreign-
hires in a bargaining unit with local-hires would not assure either group the exercise of their
respective collective bargaining rights.
WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED IN PART.
The Orders of the Secretary of Labor and Employment dated June 10, 1996 and March 19,
1997, are hereby REVERSED and SET ASIDE insofar as they uphold the practice of respondent
School of according foreign-hires higher salaries than local-hires.
SO ORDERED.
G.R. No. 167614 March 24, 2009
ANTONIO M. SERRANO, Petitioner,
vs.
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC.,
Respondents.
United Nations Secretary-General Ban Ki-Moon
Global Forum on Migration and Development
Brussels, July 10, 20071
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of
Section 10, Republic Act (R.A.) No. 8042,2 to wit:
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just,
valid or authorized cause as defined by law or contract, the workers shall be entitled to the
full reimbursement of his placement fee with interest of twelve percent (12%) per annum,
plus his salaries for the unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term, whichever is less.
x x x x (Emphasis and underscoring supplied)
does not magnify the contributions of overseas Filipino workers (OFWs) to national
development, but exacerbates the hardships borne by them by unduly limiting their
entitlement in case of illegal dismissal to their lump-sum salary either for the unexpired
portion of their employment contract "or for three months for every year of the unexpired
term, whichever is less" (subject clause). Petitioner claims that the last clause violates the
OFWs' constitutional rights in that it impairs the terms of their contract, deprives them of
equal protection and denies them due process.
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the
December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the Court of Appeals (CA), which
applied the subject clause, entreating this Court to declare the subject clause unconstitutional.
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd.
(respondents) under a Philippine Overseas Employment Administration (POEA)-approved
Contract of Employment with the following terms and conditions:

DECISION
Duration of contract 12 months
AUSTRIA-MARTINEZ, J.: Position Chief Officer

For decades, the toil of solitary migrants has helped lift entire families and communities out Basic monthly salary US$1,400.00
of poverty. Their earnings have built houses, provided health care, equipped schools and
Hours of work 48.0 hours per week
planted the seeds of businesses. They have woven together the world by transmitting ideas
and knowledge from country to country. They have provided the dynamic human link between Overtime US$700.00 per month
cultures, societies and economies. Yet, only recently have we begun to understand not only
how much international migration impacts development, but how smart public policies can Vacation leave with pay 7.00 days per month5
magnify this effect.

164
On March 19, 1998, the date of his departure, petitioner was constrained to accept a (March 19/31, 1998 to April 1/30, 1998) + 1,060.5010
downgraded employment contract for the position of Second Officer with a monthly salary of
US$1,000.00, upon the assurance and representation of respondents that he would be made --------------------
Chief Officer by the end of April 1998.6 --------------------
--------------------
Respondents did not deliver on their promise to make petitioner Chief Officer. 7 Hence, --------------------
petitioner refused to stay on as Second Officer and was repatriated to the Philippines on May --------------
26, 1998.8 TOTAL CLAIM US$ 26,442.7311

Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up
to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only as well as moral and exemplary damages and attorney's fees.
two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9)
months and twenty-three (23) days. The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal
and awarding him monetary benefits, to wit:
Petitioner filed with the Labor Arbiter (LA) a Complaint9 against respondents for constructive
dismissal and for payment of his money claims in the total amount of US$26,442.73, broken WHEREFORE, premises considered, judgment is hereby rendered declaring that the dismissal
down as follows: of the complainant (petitioner) by the respondents in the above-entitled case was illegal and
the respondents are hereby ordered to pay the complainant [petitioner], jointly and severally,
in Philippine Currency, based on the rate of exchange prevailing at the time of payment, the
May 27/31, 1998 (5 days) incl. Leave pay US$ 413.90 amount of EIGHT THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS (US
June 01/30, 1998 2,590.00 $8,770.00), representing the complainant’s salary for three (3) months of the
unexpired portion of the aforesaid contract of employment.1avvphi1
July 01/31, 1998 2,590.00
August 01/31, 1998 2,590.00 The respondents are likewise ordered to pay the complainant [petitioner], jointly and
severally, in Philippine Currency, based on the rate of exchange prevailing at the time of
Sept. 01/30, 1998 2,590.00 payment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00), 12 representing the
complainant’s claim for a salary differential. In addition, the respondents are hereby ordered
Oct. 01/31, 1998 2,590.00
to pay the complainant, jointly and severally, in Philippine Currency, at the exchange rate
Nov. 01/30, 1998 2,590.00 prevailing at the time of payment, the complainant’s (petitioner's) claim for attorney’s fees
equivalent to ten percent (10%) of the total amount awarded to the aforesaid employee under
Dec. 01/31, 1998 2,590.00 this Decision.
Jan. 01/31, 1999 2,590.00
The claims of the complainant for moral and exemplary damages are hereby DISMISSED for
Feb. 01/28, 1999 2,590.00 lack of merit.
Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00
All other claims are hereby DISMISSED.
--------------------
-------------------- SO ORDERED.13 (Emphasis supplied)
--------------------
-------------------- In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on
25,382.23 the salary period of three months only -- rather than the entire unexpired portion of nine
months and 23 days of petitioner's employment contract - applying the subject clause.
Amount adjusted to chief mate's salary However, the LA applied the salary rate of US$2,590.00, consisting of petitioner's "[b]asic

165
salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month,
vacation leave pay = US$2,590.00/compensation per month."14
Respondents appealed15 to the National Labor Relations Commission (NLRC) to question the
finding of the LA that petitioner was illegally dismissed.
Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not applying the
ruling of the Court in Triple Integrated Services, Inc. v. National Labor Relations Commission17
that in case of illegal dismissal, OFWs are entitled to their salaries for the unexpired portion
of their contracts.18
In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:
WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are hereby ordered
to pay complainant, jointly and severally, in Philippine currency, at the prevailing rate of
exchange at the time of payment the following:
1. Three (3) months salary
$1,400 x 3 US$4,200.00
2. Salary differential 45.00
US$4,245.00
3. 10% Attorney’s fees 424.50
TOTAL US$4,669.50
The other findings are affirmed.
SO ORDERED.19
The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by
reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042
"does not provide for the award of overtime pay, which should be proven to have been actually
performed, and for vacation leave pay."20
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the
constitutionality of the subject clause.21 The NLRC denied the motion.22
Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional challenge
against the subject clause.24 After initially dismissing the petition on a technicality, the CA
eventually gave due course to it, as directed by this Court in its Resolution dated August 7,
2003 which granted the petition for certiorari, docketed as G.R. No. 151833, filed by
petitioner.
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of
the applicable salary rate; however, the CA skirted the constitutional issue raised by
petitioner.25
His Motion for Reconsideration26 having been denied by the CA, 27 petitioner brings his cause
to this Court on the following grounds:
I
The Court of Appeals and the labor tribunals have decided the case in a way not in accord
with applicable decision of the Supreme Court involving similar issue of granting unto the
migrant worker back wages equal to the unexpired portion of his contract of employment
instead of limiting it to three (3) months
II
In the alternative that the Court of Appeals and the Labor Tribunals were merely applying
their interpretation of Section 10 of Republic Act No. 8042, it is submitted that the Court of
Appeals gravely erred in law when it failed to discharge its judicial duty to decide questions
of substance not theretofore determined by the Honorable Supreme Court, particularly, the
constitutional issues raised by the petitioner on the constitutionality of said law, which
unreasonably, unfairly and arbitrarily limits payment of the award for back wages of overseas
workers to three (3) months.
III
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042,
the Court of Appeals gravely erred in law in excluding from petitioner’s award the overtime
pay and vacation pay provided in his contract since under the contract they form part of his
salary.28
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old
and sickly, and he intends to make use of the monetary award for his medical treatment and
medication.29 Required to comment, counsel for petitioner filed a motion, urging the court to
allow partial execution of the undisputed monetary award and, at the same time, praying that
the constitutional question be resolved.30
Considering that the parties have filed their respective memoranda, the Court now takes up
the full merit of the petition mindful of the extreme importance of the constitutional question
raised therein.
166
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is
not disputed. Likewise not disputed is the salary differential of US$45.00 awarded to petitioner
in all three fora. What remains disputed is only the computation of the lump-sum salary to be
awarded to petitioner by reason of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner
at the monthly rate of US$1,400.00 covering the period of three months out of the unexpired
portion of nine months and 23 days of his employment contract or a total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in addition to
the US$4,200.00 awarded by the NLRC and the CA, he is entitled to US$21,182.23 more or
a total of US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left
of his employment contract, computed at the monthly rate of US$2,590.00. 31
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly impairs the
freedom of OFWs to negotiate for and stipulate in their overseas employment contracts a
determinate employment period and a fixed salary package. 32 It also impinges on the equal
protection clause, for it treats OFWs differently from local Filipino workers (local workers) by
putting a cap on the amount of lump-sum salary to which OFWs are entitled in case of illegal
dismissal, while setting no limit to the same monetary award for local workers when their
dismissal is declared illegal; that the disparate treatment is not reasonable as there is no
substantial distinction between the two groups; 33 and that it defeats Section 18,34 Article II
of the Constitution which guarantees the protection of the rights and welfare of all Filipino
workers, whether deployed locally or overseas.35
Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line
with existing jurisprudence on the issue of money claims of illegally dismissed OFWs. Though
there are conflicting rulings on this, petitioner urges the Court to sort them out for the
guidance of affected OFWs.36
Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042
serves no other purpose but to benefit local placement agencies. He marks the statement
made by the Solicitor General in his Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment of money
claims in the event that jurisdiction over the foreign employer is not acquired by the court or
if the foreign employer reneges on its obligation. Hence, placement agencies that are in good
faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign
employer. To protect them and to promote their continued helpful contribution in deploying
Filipino migrant workers, liability for money claims was reduced under Section 10 of R.A. No.
8042. 37 (Emphasis supplied)
Petitioner argues that in mitigating the solidary liability of placement agencies, the subject
clause sacrifices the well-being of OFWs. Not only that, the provision makes foreign employers
better off than local employers because in cases involving the illegal dismissal of employees,
foreign employers are liable for salaries covering a maximum of only three months of the
unexpired employment contract while local employers are liable for the full lump-sum salaries
of their employees. As petitioner puts it:
In terms of practical application, the local employers are not limited to the amount of
backwages they have to give their employees they have illegally dismissed, following well-
entrenched and unequivocal jurisprudence on the matter. On the other hand, foreign
employers will only be limited to giving the illegally dismissed migrant workers the maximum
of three (3) months unpaid salaries notwithstanding the unexpired term of the contract that
can be more than three (3) months.38
Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives
him of the salaries and other emoluments he is entitled to under his fixed-period employment
contract.39
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the constitutional issue should
not be entertained, for this was belatedly interposed by petitioner in his appeal before the CA,
and not at the earliest opportunity, which was when he filed an appeal before the NLRC.40
The Arguments of the Solicitor General
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15, 1995,
its provisions could not have impaired petitioner's 1998 employment contract. Rather, R.A.
No. 8042 having preceded petitioner's contract, the provisions thereof are deemed part of the
minimum terms of petitioner's employment, especially on the matter of money claims, as this
was not stipulated upon by the parties.42
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of
their employment, such that their rights to monetary benefits must necessarily be treated
differently. The OSG enumerates the essential elements that distinguish OFWs from local
workers: first, while local workers perform their jobs within Philippine territory, OFWs perform
their jobs for foreign employers, over whom it is difficult for our courts to acquire jurisdiction,
or against whom it is almost impossible to enforce judgment; and second, as held in Coyoca
v. National Labor Relations Commission43 and Millares v. National Labor Relations
Commission,44 OFWs are contractual employees who can never acquire regular employment
status, unlike local workers who are or can become regular employees. Hence, the OSG posits
167
that there are rights and privileges exclusive to local workers, but not available to OFWs; that
these peculiarities make for a reasonable and valid basis for the differentiated treatment
under the subject clause of the money claims of OFWs who are illegally dismissed. Thus, the
provision does not violate the equal protection clause nor Section 18, Article II of the
Constitution.45
Lastly, the OSG defends the rationale behind the subject clause as a police power measure
adopted to mitigate the solidary liability of placement agencies for this "redounds to the
benefit of the migrant workers whose welfare the government seeks to promote. The survival
of legitimate placement agencies helps [assure] the government that migrant workers are
properly deployed and are employed under decent and humane conditions." 46
The Court's Ruling
The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial review of the acts of its co-
equals, such as the Congress, it does so only when these conditions obtain: (1) that there is
an actual case or controversy involving a conflict of rights susceptible of judicial
determination;47 (2) that the constitutional question is raised by a proper party 48 and at the
earliest opportunity;49 and (3) that the constitutional question is the very lis mota of the
case,50 otherwise the Court will dismiss the case or decide the same on some other ground. 51
Without a doubt, there exists in this case an actual controversy directly involving petitioner
who is personally aggrieved that the labor tribunals and the CA computed his monetary award
based on the salary period of three months only as provided under the subject clause.
The constitutional challenge is also timely. It should be borne in mind that the requirement
that a constitutional issue be raised at the earliest opportunity entails the interposition of the
issue in the pleadings before a competent court, such that, if the issue is not raised in the
pleadings before that competent court, it cannot be considered at the trial and, if not
considered in the trial, it cannot be considered on appeal.52 Records disclose that the issue
on the constitutionality of the subject clause was first raised, not in petitioner's appeal with
the NLRC, but in his Motion for Partial Reconsideration with said labor tribunal,53 and reiterated
in his Petition for Certiorari before the CA.54 Nonetheless, the issue is deemed seasonably
raised because it is not the NLRC but the CA which has the competence to resolve the
constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-judicial function
– its function in the present case is limited to determining questions of fact to which the
legislative policy of R.A. No. 8042 is to be applied and to resolving such questions in
accordance with the standards laid down by the law itself;55 thus, its foremost function is to
administer and enforce R.A. No. 8042, and not to inquire into the validity of its provisions.
The CA, on the other hand, is vested with the power of judicial review or the power to declare
unconstitutional a law or a provision thereof, such as the subject clause. 56 Petitioner's
interposition of the constitutional issue before the CA was undoubtedly seasonable. The CA
was therefore remiss in failing to take up the issue in its decision.
The third condition that the constitutional issue be critical to the resolution of the case likewise
obtains because the monetary claim of petitioner to his lump-sum salary for the entire
unexpired portion of his 12-month employment contract, and not just for a period of three
months, strikes at the very core of the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the subject clause.
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
of contracts?
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract
on the term of his employment and the fixed salary package he will receive57 is not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
The prohibition is aligned with the general principle that laws newly enacted have only a
prospective operation,58 and cannot affect acts or contracts already perfected;59 however, as
to laws already in existence, their provisions are read into contracts and deemed a part
thereof.60 Thus, the non-impairment clause under Section 10, Article II is limited in application
to laws about to be enacted that would in any way derogate from existing acts or contracts
by enlarging, abridging or in any manner changing the intention of the parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution
of the employment contract between petitioner and respondents in 1998. Hence, it cannot be
argued that R.A. No. 8042, particularly the subject clause, impaired the employment contract
of the parties. Rather, when the parties executed their 1998 employment contract, they were
deemed to have incorporated into it all the provisions of R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject clause may not be declared
unconstitutional on the ground that it impinges on the impairment clause, for the law was
enacted in the exercise of the police power of the State to regulate a business, profession or
calling, particularly the recruitment and deployment of OFWs, with the noble end in view of
ensuring respect for the dignity and well-being of OFWs wherever they may be employed. 61
Police power legislations adopted by the State to promote the health, morals, peace,
education, good order, safety, and general welfare of the people are generally applicable not
168
only to future contracts but even to those already in existence, for all private contracts must
yield to the superior and legitimate measures taken by the State to promote public welfare.62
Does the subject clause violate Section 1,
Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?
The answer is in the affirmative.
Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without due process of law nor shall
any person be denied the equal protection of the law.
Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor sector,
without distinction as to place of deployment, full protection of their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions
translate to economic security and parity: all monetary benefits should be equally enjoyed by
workers of similar category, while all monetary obligations should be borne by them in equal
degree; none should be denied the protection of the laws which is enjoyed by, or spared the
burden imposed on, others in like circumstances.65
Such rights are not absolute but subject to the inherent power of Congress to incorporate,
when it sees fit, a system of classification into its legislation; however, to be valid, the
classification must comply with these requirements: 1) it is based on substantial distinctions;
2) it is germane to the purposes of the law; 3) it is not limited to existing conditions only;
and 4) it applies equally to all members of the class.66
There are three levels of scrutiny at which the Court reviews the constitutionality of a
classification embodied in a law: a) the deferential or rational basis scrutiny in which the
challenged classification needs only be shown to be rationally related to serving a legitimate
state interest;67 b) the middle-tier or intermediate scrutiny in which the government must
show that the challenged classification serves an important state interest and that the
classification is at least substantially related to serving that interest; 68 and c) strict judicial
scrutiny69 in which a legislative classification which impermissibly interferes with the exercise
of a fundamental right70 or operates to the peculiar disadvantage of a suspect class 71 is
presumed unconstitutional, and the burden is upon the government to prove that the
classification is necessary to achieve a compelling state interest and that it is the least
restrictive means to protect such interest.72
Under American jurisprudence, strict judicial scrutiny is triggered by suspect classifications 73
based on race74 or gender75 but not when the classification is drawn along income categories.76
It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas)
Employee Association, Inc. v. Bangko Sentral ng Pilipinas,77 the constitutionality of a provision
in the charter of the Bangko Sentral ng Pilipinas (BSP), a government financial institution
(GFI), was challenged for maintaining its rank-and-file employees under the Salary
Standardization Law (SSL), even when the rank-and-file employees of other GFIs had been
exempted from the SSL by their respective charters. Finding that the disputed provision
contained a suspect classification based on salary grade, the Court deliberately employed the
standard of strict judicial scrutiny in its review of the constitutionality of said provision. More
significantly, it was in this case that the Court revealed the broad outlines of its judicial
philosophy, to wit:
Congress retains its wide discretion in providing for a valid classification, and its policies
should be accorded recognition and respect by the courts of justice except when they run
afoul of the Constitution. The deference stops where the classification violates a fundamental
right, or prejudices persons accorded special protection by the Constitution. When
these violations arise, this Court must discharge its primary role as the vanguard of
constitutional guaranties, and require a stricter and more exacting adherence to constitutional
limitations. Rational basis should not suffice.
Admittedly, the view that prejudice to persons accorded special protection by the Constitution
requires a stricter judicial scrutiny finds no support in American or English jurisprudence.
Nevertheless, these foreign decisions and authorities are not per se controlling in this
jurisdiction. At best, they are persuasive and have been used to support many of our
decisions. We should not place undue and fawning reliance upon them and regard them as
indispensable mental crutches without which we cannot come to our own decisions through
the employment of our own endowments. We live in a different ambience and must decide
our own problems in the light of our own interests and needs, and of our qualities and even
idiosyncrasies as a people, and always with our own concept of law and justice. Our laws must
be construed in accordance with the intention of our own lawmakers and such intent may be
deduced from the language of each law and the context of other local legislation related
thereto. More importantly, they must be construed to serve our own public interest which is
the be-all and the end-all of all our laws. And it need not be stressed that our public interest
is distinct and different from others.
xxxx
Further, the quest for a better and more "equal" world calls for the use of equal protection as
a tool of effective judicial intervention.
Equality is one ideal which cries out for bold attention and action in the Constitution. The
Preamble proclaims "equality" as an ideal precisely in protest against crushing inequities in
Philippine society. The command to promote social justice in Article II, Section 10, in "all
phases of national development," further explicitated in Article XIII, are clear commands to
the State to take affirmative action in the direction of greater equality. x x x [T]here is thus
169
in the Philippine Constitution no lack of doctrinal support for a more vigorous state effort
towards achieving a reasonable measure of equality.
Our present Constitution has gone further in guaranteeing vital social and economic rights to
marginalized groups of society, including labor. Under the policy of social justice, the law
bends over backward to accommodate the interests of the working class on the humane
justification that those with less privilege in life should have more in law. And the obligation
to afford protection to labor is incumbent not only on the legislative and executive branches
but also on the judiciary to translate this pledge into a living reality. Social justice calls for
the humanization of laws and the equalization of social and economic forces by the State so
that justice in its rational and objectively secular conception may at least be approximated.
xxxx
Under most circumstances, the Court will exercise judicial restraint in deciding questions of
constitutionality, recognizing the broad discretion given to Congress in exercising its
legislative power. Judicial scrutiny would be based on the "rational basis" test, and the
legislative discretion would be given deferential treatment.
But if the challenge to the statute is premised on the denial of a fundamental right, or the
perpetuation of prejudice against persons favored by the Constitution with special
protection, judicial scrutiny ought to be more strict. A weak and watered down view
would call for the abdication of this Court’s solemn duty to strike down any law repugnant to
the Constitution and the rights it enshrines. This is true whether the actor committing the
unconstitutional act is a private person or the government itself or one of its instrumentalities.
Oppressive acts will be struck down regardless of the character or nature of the actor.
xxxx
In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-
employee status. It is akin to a distinction based on economic class and status, with the higher
grades as recipients of a benefit specifically withheld from the lower grades. Officers of the
BSP now receive higher compensation packages that are competitive with the industry, while
the poorer, low-salaried employees are limited to the rates prescribed by the SSL. The
implications are quite disturbing: BSP rank-and-file employees are paid the strictly
regimented rates of the SSL while employees higher in rank - possessing higher and better
education and opportunities for career advancement - are given higher compensation
packages to entice them to stay. Considering that majority, if not all, the rank-and-file
employees consist of people whose status and rank in life are less and limited, especially in
terms of job marketability, it is they - and not the officers - who have the real economic and
financial need for the adjustment . This is in accord with the policy of the Constitution "to free
the people from poverty, provide adequate social services, extend to them a decent standard
of living, and improve the quality of life for all." Any act of Congress that runs counter to this
constitutional desideratum deserves strict scrutiny by this Court before it can pass muster.
(Emphasis supplied)
Imbued with the same sense of "obligation to afford protection to labor," the Court in the
present case also employs the standard of strict judicial scrutiny, for it perceives in the subject
clause a suspect classification prejudicial to OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs.
However, a closer examination reveals that the subject clause has a discriminatory intent
against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis-à-vis OFWs with employment
contracts of one year or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis-à-vis local workers with fixed-period employment;
OFWs with employment contracts of less than one year vis-à-vis OFWs with
employment contracts of one year or more
As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National Labor
Relations Commission79 (Second Division, 1999) that the Court laid down the following rules
on the application of the periods prescribed under Section 10(5) of R.A. No. 804, to wit:
A plain reading of Sec. 10 clearly reveals that the choice of which amount to award
an illegally dismissed overseas contract worker, i.e., whether his salaries for the
unexpired portion of his employment contract or three (3) months’ salary for every
year of the unexpired term, whichever is less, comes into play only when the
employment contract concerned has a term of at least one (1) year or more. This is
evident from the words "for every year of the unexpired term" which follows the
words "salaries x x x for three months." To follow petitioners’ thinking that private
respondent is entitled to three (3) months salary only simply because it is the lesser amount
is to completely disregard and overlook some words used in the statute while giving effect to
some. This is contrary to the well-established rule in legal hermeneutics that in interpreting
a statute, care should be taken that every part or word thereof be given effect since the law-
making body is presumed to know the meaning of the words employed in the statue and to
have used them advisedly. Ut res magis valeat quam pereat. 80 (Emphasis supplied)
In Marsaman, the OFW involved was illegally dismissed two months into his 10-month
contract, but was awarded his salaries for the remaining 8 months and 6 days of his contract.
170
Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings
Talidano v. 12 months 3 months 9 months 3 months
on Section 10(5). One was Asian Center for Career and Employment System and Services v.
Falcon87
National Labor Relations Commission (Second Division, October 1998),81 which involved an
OFW who was awarded a two-year employment contract, but was dismissed after working for Univan v. CA 12 months 3 months 9 months 3 months
one year and two months. The LA declared his dismissal illegal and awarded him SR13,600.00 88

as lump-sum salary covering eight months, the unexpired portion of his contract. On appeal,
the Court reduced the award to SR3,600.00 equivalent to his three months’ salary, this being Oriental v. CA 12 months more than 2 10 months 3 months
the lesser value, to wit: 89
months

PCL v. NLRC90 12 months more than 2 more or less 9 3 months

Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment without
months months
just, valid or authorized cause is entitled to his salary for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired term, whichever Olarte v. 12 months 21 days 11 months and 3 months
is less. Nayona91 9 days

In the case at bar, the unexpired portion of private respondent’s employment contract is eight JSS v.Ferrer92 12 months 16 days 11 months and 3 months
(8) months. Private respondent should therefore be paid his basic salary corresponding to 24 days
three (3) months or a total of SR3,600.82
Pentagon v. 12 months 9 months 2 months and 2 months and 23
Adelantar93 and 7 days 23 days days
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission
(Third Division, December 1998),83 which involved an OFW (therein respondent Erlinda Phil. Employ v. 12 months 10 months 2 months Unexpired portion
Osdana) who was originally granted a 12-month contract, which was deemed renewed for Paramio, et
another 12 months. After serving for one year and seven-and-a-half months, respondent al.94
Osdana was illegally dismissed, and the Court awarded her salaries for the entire unexpired
portion of four and one-half months of her contract. Flourish 2 years 26 days 23 months and 6 months or 3
Maritime v. 4 days months for each
The Marsaman interpretation of Section 10(5) has since been adopted in the following cases: Almanzor 95
year of contract

Athenna 1 year, 10 1 month 1 year, 9 6 months or 3

Case Title Contract Period of Unexpired Period Applied Manpower v. months months and 28 months for each
Period Service Period in the Villanos 96 and 28 days year of contract
Computation of days
the Monetary
Award
As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories.
Skippers v. 6 months 2 months 4 months 4 months The first category includes OFWs with fixed-period employment contracts of less than one
Maguad84 year; in case of illegal dismissal, they are entitled to their salaries for the entire unexpired
portion of their contract. The second category consists of OFWs with fixed-period employment
Bahia 9 months 8 months 4 months 4 months contracts of one year or more; in case of illegal dismissal, they are entitled to monetary award
Shipping v. equivalent to only 3 months of the unexpired portion of their contracts.
Reynaldo
Chua 85 The disparity in the treatment of these two groups cannot be discounted. In Skippers, the
respondent OFW worked for only 2 months out of his 6-month contract, but was awarded his
Centennial 9 months 4 months 5 months 5 months
salaries for the remaining 4 months. In contrast, the respondent OFWs in Oriental and PCL
Transmarine
who had also worked for about 2 months out of their 12-month contracts were awarded their
v. dela Cruz l86
salaries for only 3 months of the unexpired portion of their contracts. Even the OFWs involved

171
in Talidano and Univan who had worked for a longer period of 3 months out of their 12-month
contracts before being illegally dismissed were awarded their salaries for only 3 months.
To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with
an employment contract of 10 months at a monthly salary rate of US$1,000.00 and a
hypothetical OFW-B with an employment contract of 15 months with the same monthly salary
rate of US$1,000.00. Both commenced work on the same day and under the same employer,
and were illegally dismissed after one month of work. Under the subject clause, OFW-A will
be entitled to US$9,000.00, equivalent to his salaries for the remaining 9 months of his
contract, whereas OFW-B will be entitled to only US$3,000.00, equivalent to his salaries for
3 months of the unexpired portion of his contract, instead of US$14,000.00 for the unexpired
portion of 14 months of his contract, as the US$3,000.00 is the lesser amount.
It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired
portions thereof, were treated alike in terms of the computation of their monetary benefits in
case of illegal dismissal. Their claims were subjected to a uniform rule of computation: their
basic salaries multiplied by the entire unexpired portion of their employment contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of
computation of the money claims of illegally dismissed OFWs based on their employment
periods, in the process singling out one category whose contracts have an unexpired portion
of one year or more and subjecting them to the peculiar disadvantage of having their
monetary awards limited to their salaries for 3 months or for the unexpired portion thereof,
whichever is less, but all the while sparing the other category from such prejudice, simply
because the latter's unexpired contracts fall short of one year.

The disparity becomes more aggravating when the Court takes into account jurisprudence Among OFWs With Employment Contracts of More Than One Year
that, prior to the effectivity of R.A. No. 8042 on July 14, 1995, 97 illegally dismissed
OFWs, no matter how long the period of their employment contracts, were entitled to their Upon closer examination of the terminology employed in the subject clause, the Court now
salaries for the entire unexpired portions of their contracts. The matrix below speaks for itself: has misgivings on the accuracy of the Marsaman interpretation.

Case Title Contract Period of Unexpired Period Applied in The Court notes that the subject clause "or for three (3) months for every year of the
Period Service Period the Computation unexpired term, whichever is less" contains the qualifying phrases "every year" and
of the Monetary "unexpired term." By its ordinary meaning, the word "term" means a limited or definite extent
Award of time.105 Corollarily, that "every year" is but part of an "unexpired term" is significant in
many ways: first, the unexpired term must be at least one year, for if it were any shorter,
ATCI v. CA, et 2 years 2 months 22 months 22 months there would be no occasion for such unexpired term to be measured by every year; and
al.98 second, the original term must be more than one year, for otherwise, whatever would be the
unexpired term thereof will not reach even a year. Consequently, the more decisive factor in
Phil. 2 years 7 days 23 months 23 months and 23 the determination of when the subject clause "for three (3) months for every year of the
Integrated v. and 23 days days unexpired term, whichever is less" shall apply is not the length of the original contract period
NLRC99 as held in Marsaman,106 but the length of the unexpired portion of the contract period -- the
subject clause applies in cases when the unexpired portion of the contract period is at least
JGB v. NLC100 2 years 9 months 15 months 15 months
one year, which arithmetically requires that the original contract period be more than one
Agoy v. 2 years 2 months 22 months 22 months year.
NLRC101
Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs
EDI v. NLRC, 2 years 5 months 19 months 19 months whose contract periods are for more than one year: those who are illegally dismissed with
et al.102 less than one year left in their contracts shall be entitled to their salaries for the entire
unexpired portion thereof, while those who are illegally dismissed with one year or more
Barros v. 12 months 4 months 8 months 8 months
remaining in their contracts shall be covered by the subject clause, and their monetary
NLRC, et al.103
benefits limited to their salaries for three months only.
Philippine 12 months 6 months 5 months 5 months and 18
Transmarine and 22 days and 18 days days To concretely illustrate the application of the foregoing interpretation of the subject clause,
v. Carilla104 the Court assumes hypothetical OFW-C and OFW-D, who each have a 24-month contract at
a salary rate of US$1,000.00 per month. OFW-C is illegally dismissed on the 12th month, and
OFW-D, on the 13th month. Considering that there is at least 12 months remaining in the
172
contract period of OFW-C, the subject clause applies to the computation of the latter's
monetary benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the latter's total
salaries for the 12 months unexpired portion of the contract, but to the lesser amount of
US$3,000.00 or the latter's salaries for 3 months out of the 12-month unexpired term of the
contract. On the other hand, OFW-D is spared from the effects of the subject clause, for there
are only 11 months left in the latter's contract period. Thus, OFW-D will be entitled to
US$11,000.00, which is equivalent to his/her total salaries for the entire 11-month unexpired
portion.
OFWs vis-à-vis Local Workers
With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary
awards of illegally dismissed OFWs was in place. This uniform system was applicable even to
local workers with fixed-term employment.107
The earliest rule prescribing a uniform system of computation was actually Article 299 of the
Code of Commerce (1888),108 to wit:
Article 299. If the contracts between the merchants and their shop clerks and employees
should have been made of a fixed period, none of the contracting parties, without the consent
of the other, may withdraw from the fulfillment of said contract until the termination of the
period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and damage suffered, with
the exception of the provisions contained in the following articles.
In Reyes v. The Compañia Maritima,109 the Court applied the foregoing provision to determine
the liability of a shipping company for the illegal discharge of its managers prior to the
expiration of their fixed-term employment. The Court therein held the shipping company liable
for the salaries of its managers for the remainder of their fixed-term employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of
Commerce which provides:
Article 605. If the contracts of the captain and members of the crew with the agent should be
for a definite period or voyage, they cannot be discharged until the fulfillment of their
contracts, except for reasons of insubordination in serious matters, robbery, theft, habitual
drunkenness, and damage caused to the vessel or to its cargo by malice or manifest or proven
negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,110 in
which the Court held the shipping company liable for the salaries and subsistence allowance
of its illegally dismissed employees for the entire unexpired portion of their employment
contracts.
While Article 605 has remained good law up to the present, 111 Article 299 of the Code of
Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and
for a certain work cannot leave or be dismissed without sufficient cause, before the fulfillment
of the contract. (Emphasis supplied.)
Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article 1586 as
a conjunctive "and" so as to apply the provision to local workers who are employed for a time
certain although for no particular skill. This interpretation of Article 1586 was reiterated in
Garcia Palomar v. Hotel de France Company.113 And in both Lemoine and Palomar, the Court
adopted the general principle that in actions for wrongful discharge founded on Article 1586,
local workers are entitled to recover damages to the extent of the amount stipulated to be
paid to them by the terms of their contract. On the computation of the amount of such
damages, the Court in Aldaz v. Gay114 held:
The doctrine is well-established in American jurisprudence, and nothing has been brought to
our attention to the contrary under Spanish jurisprudence, that when an employee is
wrongfully discharged it is his duty to seek other employment of the same kind in the same
community, for the purpose of reducing the damages resulting from such wrongful discharge.
However, while this is the general rule, the burden of showing that he failed to make an effort
to secure other employment of a like nature, and that other employment of a like nature was
obtainable, is upon the defendant. When an employee is wrongfully discharged under a
contract of employment his prima facie damage is the amount which he would be entitled to
had he continued in such employment until the termination of the period. (Howard vs. Daly,
61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich.,
43.)115 (Emphasis supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term
employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2
(Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book IV. 116
Much like Article 1586 of the Civil Code of 1889, the new provisions of the Civil Code do not
expressly provide for the remedies available to a fixed-term worker who is illegally discharged.
However, it is noted that in Mackay Radio & Telegraph Co., Inc. v. Rich, 117 the Court carried
over the principles on the payment of damages underlying Article 1586 of the Civil Code of
1889 and applied the same to a case involving the illegal discharge of a local worker whose
fixed-period employment contract was entered into in 1952, when the new Civil Code was
already in effect.118
173
More significantly, the same principles were applied to cases involving overseas Filipino
workers whose fixed-term employment contracts were illegally terminated, such as in First
Asian Trans & Shipping Agency, Inc. v. Ople,119 involving seafarers who were illegally
discharged. In Teknika Skills and Trade Services, Inc. v. National Labor Relations
Commission,120 an OFW who was illegally dismissed prior to the expiration of her fixed-period
employment contract as a baby sitter, was awarded salaries corresponding to the unexpired
portion of her contract. The Court arrived at the same ruling in Anderson v. National Labor
Relations Commission,121 which involved a foreman hired in 1988 in Saudi Arabia for a fixed
term of two years, but who was illegally dismissed after only nine months on the job -- the
Court awarded him salaries corresponding to 15 months, the unexpired portion of his contract.
In Asia World Recruitment, Inc. v. National Labor Relations Commission,122 a Filipino working
as a security officer in 1989 in Angola was awarded his salaries for the remaining period of
his 12-month contract after he was wrongfully discharged. Finally, in Vinta Maritime Co., Inc.
v. National Labor Relations Commission,123 an OFW whose 12-month contract was illegally
cut short in the second month was declared entitled to his salaries for the remaining 10
months of his contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who
were illegally discharged were treated alike in terms of the computation of their money claims:
they were uniformly entitled to their salaries for the entire unexpired portions of their
contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the subject
clause, illegally dismissed OFWs with an unexpired portion of one year or more in their
employment contract have since been differently treated in that their money claims are
subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-
term employment.
The Court concludes that the subject clause contains a suspect classification in that,
in the computation of the monetary benefits of fixed-term employees who are
illegally discharged, it imposes a 3-month cap on the claim of OFWs with an
unexpired portion of one year or more in their contracts, but none on the claims of
other OFWs or local workers with fixed-term employment. The subject clause
singles out one classification of OFWs and burdens it with a peculiar disadvantage.
There being a suspect classification involving a vulnerable sector protected by the
Constitution, the Court now subjects the classification to a strict judicial scrutiny, and
determines whether it serves a compelling state interest through the least restrictive means.
What constitutes compelling state interest is measured by the scale of rights and powers
arrayed in the Constitution and calibrated by history.124 It is akin to the paramount interest
of the state125 for which some individual liberties must give way, such as the public interest
in safeguarding health or maintaining medical standards,126 or in maintaining access to
information on matters of public concern.127
In the present case, the Court dug deep into the records but found no compelling state interest
that the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure "designed to protect the
employment of Filipino seafarers overseas x x x. By limiting the liability to three months [sic],
Filipino seafarers have better chance of getting hired by foreign employers." The limitation
also protects the interest of local placement agencies, which otherwise may be made to
shoulder millions of pesos in "termination pay."128
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the payment of money
claims in the event that jurisdiction over the foreign employer is not acquired by the court or
if the foreign employer reneges on its obligation. Hence, placement agencies that are in good
faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign
employer. To protect them and to promote their continued helpful contribution in deploying
Filipino migrant workers, liability for money are reduced under Section 10 of RA 8042.
This measure redounds to the benefit of the migrant workers whose welfare the government
seeks to promote. The survival of legitimate placement agencies helps [assure] the
government that migrant workers are properly deployed and are employed under decent and
humane conditions.129 (Emphasis supplied)
However, nowhere in the Comment or Memorandum does the OSG cite the source of its
perception of the state interest sought to be served by the subject clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in
sponsorship of House Bill No. 14314 (HB 14314), from which the law originated; 130 but the
speech makes no reference to the underlying reason for the adoption of the subject clause.
That is only natural for none of the 29 provisions in HB 14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims, to
wit:
Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of
the complaint, the claims arising out of an employer-employee relationship or by virtue of the
complaint, the claim arising out of an employer-employee relationship or by virtue of any law
or contract involving Filipino workers for overseas employment including claims for actual,
moral, exemplary and other forms of damages.
The liability of the principal and the recruitment/placement agency or any and all claims under
this Section shall be joint and several.
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Any compromise/amicable settlement or voluntary agreement on any money claims exclusive
of damages under this Section shall not be less than fifty percent (50%) of such money
claims: Provided, That any installment payments, if applicable, to satisfy any such
compromise or voluntary settlement shall not be more than two (2) months. Any
compromise/voluntary agreement in violation of this paragraph shall be null and void.
Non-compliance with the mandatory period for resolutions of cases provided under this
Section shall subject the responsible officials to any or all of the following penalties:
(1) The salary of any such official who fails to render his decision or resolution within the
prescribed period shall be, or caused to be, withheld until the said official complies therewith;
(2) Suspension for not more than ninety (90) days; or
(3) Dismissal from the service with disqualification to hold any appointive public office for five
(5) years.
Provided, however, That the penalties herein provided shall be without prejudice to any
liability which any such official may have incurred under other existing laws or rules and
regulations as a consequence of violating the provisions of this paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of
money claims.
A rule on the computation of money claims containing the subject clause was inserted and
eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The Court examined
the rationale of the subject clause in the transcripts of the "Bicameral Conference Committee
(Conference Committee) Meetings on the Magna Carta on OCWs (Disagreeing Provisions of
Senate Bill No. 2077 and House Bill No. 14314)." However, the Court finds no discernible
state interest, let alone a compelling one, that is sought to be protected or advanced by the
adoption of the subject clause.
In fine, the Government has failed to discharge its burden of proving the existence of a
compelling state interest that would justify the perpetuation of the discrimination against
OFWs under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the
employment of OFWs by mitigating the solidary liability of placement agencies, such callous
and cavalier rationale will have to be rejected. There can never be a justification for any form
of government action that alleviates the burden of one sector, but imposes the same burden
on another sector, especially when the favored sector is composed of private businesses such
as placement agencies, while the disadvantaged sector is composed of OFWs whose protection
no less than the Constitution commands. The idea that private business interest can be
elevated to the level of a compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of
placement agencies vis-a-vis their foreign principals, there are mechanisms already in place
that can be employed to achieve that purpose without infringing on the constitutional rights
of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based
Overseas Workers, dated February 4, 2002, imposes administrative disciplinary measures on
erring foreign employers who default on their contractual obligations to migrant workers
and/or their Philippine agents. These disciplinary measures range from temporary
disqualification to preventive suspension. The POEA Rules and Regulations Governing the
Recruitment and Employment of Seafarers, dated May 23, 2003, contains similar
administrative disciplinary measures against erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of aiding
local placement agencies in enforcing the solidary liability of their foreign principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of
the right of petitioner and other OFWs to equal protection.1avvphi1
Further, there would be certain misgivings if one is to approach the declaration of the
unconstitutionality of the subject clause from the lone perspective that the clause directly
violates state policy on labor under Section 3,131 Article XIII of the Constitution.
While all the provisions of the 1987 Constitution are presumed self-executing,132 there are
some which this Court has declared not judicially enforceable, Article XIII being one,133
particularly Section 3 thereof, the nature of which, this Court, in Agabon v. National Labor
Relations Commission,134 has described to be not self-actuating:
Thus, the constitutional mandates of protection to labor and security of tenure may be deemed
as self-executing in the sense that these are automatically acknowledged and observed
without need for any enabling legislation. However, to declare that the constitutional
provisions are enough to guarantee the full exercise of the rights embodied therein, and the
realization of ideals therein expressed, would be impractical, if not unrealistic. The espousal
of such view presents the dangerous tendency of being overbroad and exaggerated. The
guarantees of "full protection to labor" and "security of tenure", when examined in isolation,
are facially unqualified, and the broadest interpretation possible suggests a blanket shield in
favor of labor against any form of removal regardless of circumstance. This interpretation
implies an unimpeachable right to continued employment-a utopian notion, doubtless-but still
hardly within the contemplation of the framers. Subsequent legislation is still needed to define
the parameters of these guaranteed rights to ensure the protection and promotion, not only
the rights of the labor sector, but of the employers' as well. Without specific and pertinent
legislation, judicial bodies will be at a loss, formulating their own conclusion to approximate
at least the aims of the Constitution.
175
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a
positive enforceable right to stave off the dismissal of an employee for just cause owing
to the failure to serve proper notice or hearing. As manifested by several framers of the 1987
Constitution, the provisions on social justice require legislative enactments for their
enforceability.135 (Emphasis added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable
rights, for the violation of which the questioned clause may be declared unconstitutional. It
may unwittingly risk opening the floodgates of litigation to every worker or union over every
conceivable violation of so broad a concept as social justice for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the working class
any actual enforceable right, but merely clothes it with the status of a sector for whom the
Constitution urges protection through executive or legislative action and judicial
recognition. Its utility is best limited to being an impetus not just for the executive and
legislative departments, but for the judiciary as well, to protect the welfare of the working
class. And it was in fact consistent with that constitutional agenda that the Court in Central
Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng
Pilipinas, penned by then Associate Justice now Chief Justice Reynato S. Puno, formulated the
judicial precept that when the challenge to a statute is premised on the perpetuation of
prejudice against persons favored by the Constitution with special protection -- such as the
working class or a section thereof -- the Court may recognize the existence of a suspect
classification and subject the same to strict judicial scrutiny.
The view that the concepts of suspect classification and strict judicial scrutiny formulated in
Central Bank Employee Association exaggerate the significance of Section 3, Article XIII is a
groundless apprehension. Central Bank applied Article XIII in conjunction with the equal
protection clause. Article XIII, by itself, without the application of the equal protection clause,
has no life or force of its own as elucidated in Agabon.
Along the same line of reasoning, the Court further holds that the subject clause violates
petitioner's right to substantive due process, for it deprives him of property, consisting of
monetary benefits, without any existing valid governmental purpose.136
The argument of the Solicitor General, that the actual purpose of the subject clause of limiting
the entitlement of OFWs to their three-month salary in case of illegal dismissal, is to give
them a better chance of getting hired by foreign employers. This is plain speculation. As earlier
discussed, there is nothing in the text of the law or the records of the deliberations leading to
its enactment or the pleadings of respondent that would indicate that there is an existing
governmental purpose for the subject clause, or even just a pretext of one.
The subject clause does not state or imply any definitive governmental purpose; and it is for
that precise reason that the clause violates not just petitioner's right to equal protection, but
also her right to substantive due process under Section 1,137 Article III of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire
unexpired period of nine months and 23 days of his employment contract, pursuant to law
and jurisprudence prior to the enactment of R.A. No. 8042.
On the Third Issue
Petitioner contends that his overtime and leave pay should form part of the salary basis in
the computation of his monetary award, because these are fixed benefits that have been
stipulated into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like
petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment
Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime,
leave pay and other bonuses; whereas overtime pay is compensation for all work "performed"
in excess of the regular eight hours, and holiday pay is compensation for any work
"performed" on designated rest days and holidays.
By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and
holiday pay in the computation of petitioner's monetary award, unless there is evidence that
he performed work during those periods. As the Court held in Centennial Transmarine, Inc.
v. Dela Cruz,138
However, the payment of overtime pay and leave pay should be disallowed in light of our
ruling in Cagampan v. National Labor Relations Commission, to wit:
The rendition of overtime work and the submission of sufficient proof that said was actually
performed are conditions to be satisfied before a seaman could be entitled to overtime pay
which should be computed on the basis of 30% of the basic monthly salary. In short, the
contract provision guarantees the right to overtime pay but the entitlement to such benefit
must first be established.
In the same vein, the claim for the day's leave pay for the unexpired portion of the contract
is unwarranted since the same is given during the actual service of the seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months for
every year of the unexpired term, whichever is less" in the 5th paragraph of Section 10 of
Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL; and the December 8, 2004
Decision and April 1, 2005 Resolution of the Court of Appeals are MODIFIED to the effect
that petitioner is AWARDED his salaries for the entire unexpired portion of his employment
contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per
month.
176
No costs.
SO ORDERED.
hereunder are the pertinent portions of that ruling:
It was established on record that before the late Lutero Remo signed his last contract with
private respondents as Cook-Steward of the vessel "M/T Captain Mitsos L," he was required
to undergo a series of medical examinations. Yet, he was declared "fit to work" by private
respondents’ company designated-physician. On April 19, 1999, Remo was discharged from
his vessel after he was hospitalized in Fujairah for atrial fibrillation and congestive heart
failure. His death on August 28, 2000, even if it occurred months after his repatriation, due
to hypertensive cardio-vascular disease, could clearly have been work related. Declared as
"fit to work" at the time of hiring, and hospitalized while on service onaccount of "atrial
fibrillation and congestive heart failure," his eventual death due to "hypertensive cardio-
vascular disease" could only be work related. The death due to "hypertensive cardio-vascular
disease" could in fact be traced to Lutero Remo’s being the "Cook-Steward." As Cook-Steward
of an ocean going vessel, Remo had no choice but to prepare and eat hypertension inducing
food, a kind of food that eventually caused his "hypertensive cardio-vascular disease," a
disease which in turn admittedly caused his death.
Private respondents cannot deny liability for the subject death by claiming that the seafarer’s
death occurred beyond the term of his employment and worsely, that there has been
misrepresentation on the part of the seafarer. For, as employer, the private respondents had
all the opportunity to pre-qualify, thoroughly screen and choose their applicants to determine
if they are medically, psychologically and mentally fit for employment. That the seafarer here
was subjected to the required prequalification standards before he was admitted as Cook-
Steward, it thus has to be safely presumed that the late Remo was in a good state of health
when he boarded the vessel.69 (Emphases and underscoring supplied; citation omitted)
More recently, in the 2013 case of Inter-Orient Maritime, Incorporated v. Candava,70 also
decided under the framework of the 1996 POEA-SEC, the Court pronounced that the seafarer’s
death therein, despite occurring after his repatriation, remains "compensable for having been
caused by an illness duly established to have been contracted in the course of his
employment."71
Thus, considering the constitutional mandate on labor as well as relative jurisprudential
context, the rule, restated for a final time, should be as follows: if the seafarer’s work-related
injury or illness (that eventually causes his medical repatriation and, thereafter, his death, as
in this case) occurs during the term of his employment, then the employer becomes liable for
death compensation benefits under Section 20 (A) of the 2000 POEA-SEC. The provision
cannot be construed otherwise for to do so would not only transgress prevailing constitutional
policy and deride the bearings of relevant case law but also result in a travesty of fairness
and an indifference to social justice.
For all these reasons, the Court hereby grants the petition.
WHEREFORE, the petition is GRANTED. The Decision dated May 19, 2009 and the Resolution
dated October 30, 2009 of the Court of Appeals in CA-G.R. SP No. 104479 are hereby
REVERSED and SET ASIDE and the Decision dated April 30, 2008 of the National Labor
Relations Commission is REINSTATED.
SO ORDERED.
G.R. Nos. 171594-96 September 18, 2013
ASIA BREWERY, INC., Petitioner,
vs.
TUNAY NA PAGKAKAISA NG MGA MANGGAGAWA SA ASIA (TPMA), Respondent.
DECISION
DEL CASTILLO, J.:
In cases of compulsory arbitration before the Secretary of Labor pursuant to Article 263(g) of
the Labor Code, the financial statements of the employer must be properly audited by an
external and independent auditor in order to be admissible in evidence for purposes of
determining the proper wage award.
This Petition for Review on Certiorari assails the Court of Appeal’s (CA) October 6, 2005
Decision1 and the February 17, 2006 Amended Decision2 in CA-G.R. SP Nos. 80839, and
83168 which modified the January 19, 2004 Decision 3 of the Secretary of Labor in OS-AJ-
0042-2003.
Factual Antecedents
The antecedents are aptly summarized by the CA:
Respondent union Tunay Na Pagkakaisa ng mga Manggagawa sa Asia (TPMA) is a legitimate
labor organization, certified as the sole and exclusive bargaining agent of all regular rank and
file employees of petitioner corporation Asia Brewery, Incorporated (ABI). The petitioner
corporation, on the other hand, is a company engaged in the manufacture, sale and
distribution of beer, shandy, glass and bottled water products. It employs about 1,500
workers and has existing distributorship agreements with at least 13 companies.
Respondent union and petitioner corporation had been negotiating for a new collective
bargaining agreement (CBA) for the years 2003-2006 since the old CBA expired last July
2003. After about 18 sessions or negotiations, the parties were still unable to reconcile their
177
differences on their respective positions on most items, particularly on wages and other "a. Complete Audited Financial Statements for the past five (5) years certified as to its
economic benefits. completeness by the Chief Financial Comptroller or Accountant;

On October 21, 2003, the Respondent union declared a deadlock. On October 27, 2003, "b. Projected Financial Statements of the Company for the next three (3) years;
Respondent union filed a notice of strike with the National Conciliation and Mediation Board
(NCMB), docketed as NCMB-RB-IV-LAG- NS-10-064-03. However, the parties did not come "c. CBA history as to economic issues; and
to terms even before the NCMB.
"d. The average monthly salary of the employees in this bargaining unit.
On November 18, 2003, Respondent union conducted a strike vote. Out of the 840 union
members, 768 voted in favor of holding a strike. "2. The Union is required to provide an itemized summary of their CBA demands with financial
costing and sample CBA’s (if any) in similarly situated or comparable bargaining units.
On November 20, 2003, petitioner corporation then petitioned the Secretary of the
Department of Labor and Employment (DOLE) to assume jurisdiction over the parties’ labor "In the interest of speedy labor justice, this Office will entertain no motion for extension or
dispute, invoking Article 263 (g) of the Labor Code. In answer, Respondent union opposed postponement.
the assumption of jurisdiction, reasoning therein that the business of petitioner corporation is
not in dispensable to the national interest.
"The appropriate police authority is hereby deputized to enforce this Order in case of defiance
or the same is not forthwith obeyed.
On December 2, 2003, Respondent union filed before the Court of Appeals a petition for
injunction, docketed as CA-G.R. SP No. 80839, which sought to enjoin the respondent
"SO ORDERED."
Secretary of Labor from assuming jurisdiction over the labor dispute, or in the alternative, to
issue a temporary restraining order, likewise to enjoin the former from assuming jurisdiction.
xxxx
On December 19, 2003, the public respondent, through Undersecretary/Acting Secretary
Manuel G. Imson, issued an order assuming jurisdiction over the labor dispute between the On January 19, 2004, respondent union filed another petition for certiorari with the Court of
Respondent union and petitioner corporation. The pertinent portions of the said order read: Appeals, docketed as CA-G.R. SP No. 81639,imputing bad faith and grave abuse of discretion
to the Secretary of Labor. Respondent union prayed therein for the nullification of the order
of assumption of jurisdiction and the declaration that petitioner corporation is not an industry
xxxx
indispensable to the national interest.

"WHEREFORE, based on our considered determination that the current labor dispute is likely
In the meantime, in a decision dated January 19, 2004, Secretary of Labor Patricia Sto. Tomas
to adversely affect national interest, this Office hereby ASSUMES JURISDICTION over the
resolved the deadlock between the parties. As summarized in a later resolution, the public
labor dispute between the ASIA BREWERY, INCORPORATED and the TUNAY NA PAGKAKAISA
respondent granted the following arbitral awards:
NGMANGGAGAWA SA ASIA pursuant to Article 263 (g) of the Labor Code, as amended.
Accordingly, any strike or lockout in the Company, whether actual or impending, is hereby
enjoined. Parties are hereby directed to cease and desist from taking any action that might (1) WAGE INCREASES as follows:
exacerbate the situation.
First Year = ₱18.00
xxxx
Second Year = 15.00
"To expedite the resolution of this dispute, the parties are directed to submit in three (3) Third Year = 12.00
copies, their Position Papers within ten (10) days from receipt of this Order and another five
(5) days from receipt of the said position papers to submit their Reply.

"1. The Company shall be required to provide: Total = ₱45.00

178
(2) HEALTH CARE (HMO)
₱1,300 premium to be shouldered by Asia Brewery, Inc., for each covered employee and
₱1,800 contribution for each Union member-dependent.
xxxx
The respondent union moved for a reconsideration of the decision on the ground that the
ruling lacks evidentiary proof to sufficiently justify the same. It also filed a "Paglilinaw o
Pagwawasto" of the Decision. Similarly, petitioner corporation also filed a motion for
clarification/reconsideration. The respondent Secretary of Labor resolved all three motions in
a resolution dated January 29, 2004 x x x.
xxxx
Thereafter, on February 9, 2004, the parties executed and signed the Collective Bargaining
Agreement with a term from August 1, 2003 to July 31,2006.
Subsequently, on April 1, 2004, respondent union filed another petition for certiorari before
the Court of Appeals, which was docketed as SP-83168, assailing the arbitral award and
imputing grave abuse of discretion upon the public respondent.
xxxx 4 is DENIED and the Partial Motion for Reconsideration of petitioner corporation is PARTIALLY
Court of Appeal’s Ruling
On October 6, 2005, the CA rendered the first assailed Decision affirming with modification
the arbitral award of the Secretary of Labor, viz:
WHEREFORE, judgment is hereby rendered with the following rulings:
1) The assailed order dated December 19, 2003 of public respondent Secretary of Labor is
AFFIRMED . The petitions for injunction and certiorari in CA-G.R. SP Nos. 80839 and 81639
are denied and accordingly DISMISSED.
2) In CA-G.R. SP No. 81368, the assailed decision dated January 19,2004 and the order dated
January 29, 2004 of the public respondent are hereby MODIFIED to read as follows:
a) The present CBA is declared effective as of August 1, 2003;
b) Consequently, the employees are entitled to the arbitral awards or benefits from August 1,
2003 on top of the ₱2,500.00 signing bonus;
c) The computation of the wage increase is REMANDED to the public respondent; and
d) The health benefit of the employees shall be ₱1,390.00.
SO ORDERED.5
In modifying the arbitral award of the Secretary of Labor, the CA ruled that: (1)The effectivity
of the CBA should be August 1, 2003 because this is the date agreed upon by the parties and
not January 1, 2004 as decreed by the Secretary of Labor; (2) The computation of wage
increase should be remanded to the Secretary of Labor because the computation was based
on petitioner corporation’s unaudited financial statements, which have no probative value
pursuant to the ruling in Restaurante Las Conchas v. Llego, 6 and was done in contravention
of DOLE Advisory No. 1, Series of 2004, which contained the guidelines in resolving bargaining
deadlocks; and (3) The health benefits should be ₱1,390.00 per covered employee because
petitioner corporation had already agreed to this amount and the same cannot be altered or
reduced by the Secretary of Labor.
Aggrieved, respondent union and petitioner corporation moved for reconsideration and partial
reconsideration, respectively. On February 17, 2006,the CA issued an Amended Decision, viz
:
WHEREFORE , the foregoing considered, the Motion for Reconsideration of respondent union
GRANTED .Accordingly, Our Decision is MODIFIED and the signing bonus previously awarded
is hereby DELETED . The assailed Decision of the respondent Secretary with respect to the
issue on salary increases is REMANDED to her office for a definite resolution within one month
from the finality of this Court’s Decision using as basis the externally audited financial
statements to be submitted by petitioner corporation.
SO ORDERED.7
The CA partially modified its previous Decision by deleting the award of the signing bonus. It
ruled that, pursuant to the express provisions of the CBA, the signing bonus is over and
beyond what the parties agreed upon in the said CBA.
From this Amended Decision, only petitioner corporation appealed to this Court via this
Petition for Review on Certiorari.
Issues
Petitioner corporation raises the following issues for our resolution:
179
I. Whether the CA erred when it failed to dismiss CA-G.R. SP No.83168 despite the lack of
authority of those who instituted it.
II. Whether the CA erred when it remanded to the Secretary of Labor the issue on wage
increase.
III. Whether the CA erred when it awarded ₱1,390.00 as premium payment for each covered
employee.8
Our Ruling
The Petition lacks merit.
The authority of Rodrigo Perez (Perez)
to file the petition before the CA was not
sufficiently refuted.
Petitioner corporation claims that Perez, the person who verified the Petition in CA-G.R. SP
No. 83168 questioning the propriety of the arbitral award issued by the Secretary of Labor,
was without authority to represent respondent union. While there was a Secretary’s Certificate
attached to the aforesaid Petition purportedly authorizing Perez to file the Petition on behalf
of the union, there was no showing that the union president, Jose Manuel Miranda (Miranda),
called for and presided over the meeting when the said resolution was adopted as required
by the union’s constitution and by-laws. Moreover, the aforesaid resolution was adopted on
March 23, 2004 while the Petition was filed on April 1, 2004 or nine days from the adoption
of the resolution. Under the union’s constitution and by-laws, the decision of the board of
directors becomes effective only after two weeks from its issuance. Thus, at the time of the
filing of the aforesaid Petition, the resolution authorizing Perez to file the same was still
ineffective. Petitioner corporation also adverts to two labor cases allegedly divesting Perez of
authority to represent the union in the case before the appellate court.
We disagree.
The Secretary’s Certificate9 attached to the Petition in CA-G.R. SP No.83168 stated that the
union’s board of directors held a special meeting on March23, 2004 and unanimously passed
a resolution authorizing Perez to file a Petition before the CA to question the Secretary of
Labor’s arbitral award.10 While petitioner corporation claims that the proper procedure for
calling such a meeting was not followed, it presented no proof to establish the same. Miranda,
the union president who allegedly did not call for and preside over the said meeting, did not
come out to contest the validity of the aforesaid resolution or Secretary’s Certificate. Similarly,
petitioner corporation’s claim that the aforesaid resolution was still ineffective at the time of
the filing of the subject Petition is unsubstantiated. A fair reading of the provisions which
petitioner corporation cited in the union’s constitution and by-laws, particularly Article VIII,
Section 211 thereof, would show that the same refers to decisions of the board of directors
regarding the laws or rules that would govern the union, hence, the necessity of a two-week
prior notice to the affected parties before they become effective. These provisions have not
been shown to apply to resolutions granting authority to individuals to represent the union in
court cases. Besides, even if we assume that these provisions in the union’s constitution and
by-laws apply to the subject resolution, the continuing silence of the union, from the time of
its adoption to the filing of the Petition with the CA and up to this point in these proceedings,
would indicate that such defect, if at all present, in the authority of Perez to file the subject
Petition, was impliedly ratified by respondent union itself.
As to the two labor cases allegedly divesting Perez of the authority to file the subject Petition,
an examination of the same would show that they did not affect the legal capacity of Perez to
file the subject Petition. The first labor case (i.e., RO400-0407-AU-002,12 RO400-0409-AU-
006,13 and RO400-0412-AU-00114) involved the move of Perez and other union members to
amend the union’s Constitution and By-Laws in order to include a provision on recall elections
and to conduct a recall elections on June 26, 2004. In that case, the Med-Arbiter, in his
January 25, 2005 Order,15 ruled that the amendment sought to be introduced was not validly
ratified by the requisite two-thirds vote from the union membership. As a result, the recall
elections held on June 26, 2004 was annulled.16 The second labor case (
i.e. , NLRC NCR CC No. 000282-0417 and NLRC-RAB IV-12-20200-04-L18) involved the strike
staged by Perez and other union members on October 4, 2004. There, the National Labor
Relations Commission, in its March 2006Decision,19 ruled that the strike was illegal and, as a
consequence, Perez and the other union members were declared to have lost their
employment status.20
These two labor cases had no bearing on the legal capacity of Perez to represent the union in
CA-G.R. SP No. 83168 because (1) they did not nullify the authority granted to Perez in the
March 23, 2004 resolution of the union’s board of directors to file the subject Petition, and
(2) the material facts of these cases occurred and the Decisions thereon were rendered after
the subject Petition was already filed with the CA on April 1, 2004.
The remand of this case to the Secretary
of Labor as to the issue of wage increase
was proper.
Petitioner corporation admits that what it submitted to the Secretary of Labor were unaudited
financial statements which were then used as one of the bases in fixing the wage award.
However, petitioner corporation argues that these financial statements were duly signed and
certified by its chief financial officer. These statements have also been allegedly submitted to
various government agencies and should, thus, be considered official and public documents.
Moreover, respondent union did not object to the subject financial statements in the
proceedings before the Secretary of Labor and even used the same in formulating its (the
union’s) arguments in said proceedings. Thus, petitioner corporation contends that although
the subject financial statements were not audited by an external and independent auditor,
180
the same should be considered substantial compliance with the order of the Secretary of Labor
to produce the petitioner corporation’s complete audited financial statements for the past five
years. Furthermore, the Decision of the Secretary of Labor was not solely based on the subject
financial statements as the CBA history, costing of the proposals, and wages in other similarly
situated bargaining units were considered. Finally, petitioner corporation claims that the
demands of respondent union on wage increase are unrealistic and will cause the former to
close shop.
The contention is untenable.
In Restaurante Las Conchas v. Llego,21 several employees filed a case for illegal dismissal
after the employer closed its restaurant business. The employer sought to justify the closure
through unaudited financial statements showing the alleged losses of the business. We ruled
that such financial statements are mere self-serving declarations and inadmissible in evidence
even if the employees did not object to their presentation before the Labor Arbiter. 22 Similarly,
in Uichico v. National Labor Relations Commission,23 the services of several employees were
terminated on the ground of retrenchment due to alleged serious business losses suffered by
the employer. We ruled that by submitting unaudited financial statements, the employer failed
to prove the alleged business losses, viz :
x x x It is true that administrative and quasi-judicial bodies like the NLRC are not bound by
the technical rules of procedure in the adjudication of cases. However, this procedural rule
should not be construed as a license to disregard certain fundamental evidentiary rules. While
the rules of evidence prevailing in the courts of law or equity are not controlling in proceedings
before the NLRC, the evidence presented before it must at least have a modicum of
admissibility for it to be given some probative value. The Statement of Profit and Losses
submitted by Crispa, Inc. to prove its alleged losses, without the accompanying signature of
a certified public accountant or audited by an independent auditor, are nothing but self-
serving documents which ought to be treated as a mere scrap of paper devoid of any probative
value. For sure, this is not the kind of sufficient and convincing evidence necessary to
discharge the burden of proof required of petitioners to establish the alleged losses suffered
by Crispa, Inc. in the years immediately preceding 1990 that would justify the retrenchment
of respondent employees. x x x24
While the above-cited cases involve proof necessary to establish losses in cases of business
closure or retrenchment, we see no reason why this rule should not equally apply to the
determination of the proper level of wage award in cases where the Secretary of Labor
assumes jurisdiction in a labor dispute pursuant to Article 263(g) 25 of the Labor Code.
In MERALCO v. Sec. Quisumbing,26 we had occasion to expound on the extent of our review
powers over the arbitral award of the Secretary of Labor, in general, and the factors that the
Secretary of Labor must consider in determining the proper wage award, in particular, viz:
The extent of judicial review over the Secretary of Labor's arbitral award is not limited to a
determination of grave abuse in the manner of the secretary's exercise of his statutory
powers. This Court is entitled to, and must — in the exercise of its judicial power — review
the substance of the Secretary's award when grave abuse of discretion is alleged to exist in
the award, i.e., in the appreciation of and the conclusions the Secretary drew from the
evidence presented.
xxxx
In this case we believe that the more appropriate and available standard — and one does not
require a constitutional interpretation — is simply the standard of reasonableness. In layman's
terms, reasonableness implies the absence of arbitrariness; in legal parlance, this translates
into the exercise of proper discretion and to the observance of due process. Thus, the question
we have to answer in deciding this case is whether the Secretary's actions have been
reasonable in light of the parties' positions and the evidence they presented.
xxxx
This Court has recognized the Secretary of Labor's distinct expertise in the study and
settlement of labor disputes falling under his power of compulsory arbitration. It is also well-
settled that factual findings of labor administrative officials, if supported by substantial
evidence, are entitled not only to great respect but even to finality. x x x
But at the same time, we also recognize the possibility that abuse of discretion may attend
the exercise of the Secretary's arbitral functions; his findings in an arbitration case are usually
based on position papers and their supporting documents (as they are in the present case),
and not on the thorough examination of the parties' contending claims that may be present
in a court trial and in the face-to-face adversarial process that better insures the proper
presentation and appreciation of evidence. There may also be grave abuse of discretion where
the board, tribunal or officer exercising judicial function fails to consider evidence adduced by
the parties. Given the parties' positions on the justiciability of the issues before us, the
question we have to answer is one that goes into the substance of the Secretary's disputed
orders: Did the Secretary properly consider and appreciate the evidence presented before
him?
xxxx
While We do not seek to enumerate in this decision the factors that should affect wage
determination, we must emphasize that a collective bargaining dispute such as this one
requires due consideration and proper balancing of the interests of the parties to the dispute
and of those who might be affected by the dispute. To our mind, the best way in approaching
this task holistically is to consider the available objective facts, including, where applicable,
factors such as the bargaining history of the company, the trends and amounts of arbitrated
and agreed wage awards and the company's previous CBAs, and industry trends in general.
181
As a rule, affordability or capacity to pay should be taken into account but cannot be the sole For the SECOND For the Second 18
yardstick in determining the wage award, especially in a public utility like MERALCO.1âwphi1 36 18
YEAR: months:
In considering a public utility, the decision maker must always take into account the "public
interest" aspects of the case; MERALCO's income and the amount of money available for For the THIRD YEAR: 36
operating expenses — including labor costs — are subject to State regulation. We must also
keep in mind that high operating costs will certainly and eventually be passed on to the ======= =======
consuming public as MERALCO has bluntly warned in its pleadings. TOTAL: ₱108 for ₱36
three (3) years for 36 months
We take note of the "middle ground" approach employed by the Secretary in this case which
we do not necessarily find to be the best method of resolving a wage dispute. Merely finding this Office awards the following wage increases:
the midway point between the demands of the company and the union, and "splitting the
difference" is a simplistic solution that fails to recognize that the parties may already be at
the limits of the wage levels they can afford. It may lead to the danger too that neither of the For the FIRST YEAR: ₱18
parties will engage in principled bargaining; the company may keep its position artificially low
while the union presents an artificially high position, on the fear that a "Solomonic" solution For the SECOND YEAR: 15
cannot be avoided. Thus, rather than encourage agreement, a "middle ground approach" 12P
instead promotes a "play safe" attitude that leads to more deadlocks than to successfully For the THIRD YEAR: ===
negotiated CBAs.27 =

Thus, we rule that the Secretary of Labor gravely abused her discretion when she relied on 45 for three (3) years30
the unaudited financial statements of petitioner corporation in determining the wage award
because such evidence is self-serving and inadmissible. Not only did this violate the December
As can be seen, the Secretary of Labor failed to indicate the actual data upon which the wage
19, 2003 Order28 of the Secretary of Labor herself to petitioner corporation to submit its
award was based.1âwphi1 It even appears that she utilized the "middle ground" approach
complete audited financial statements, but this may have resulted to a wage award that is
which we precisely warned against in Meralco . Factors such as the actual and projected net
based on an inaccurate and biased picture of petitioner corporation's capacity to pay — one
operating income, impact of the wage increase on net operating income, the company's
of the more significant factors in making a wage award. Petitioner corporation has offered no
previous CBAs, and industry trends were not discussed in detail so that the precise bases of
reason why it failed and/or refused to submit its audited financial statements for the past five
the wage award are not discernible on the face of the Decision. The contending parties are
years relevant to this case. This only further casts doubt as to the veracity and accuracy of
effectively precluded from seeking a review of the wage award, even if proper under our ruling
the unaudited financial statements it submitted to the Secretary of Labor. Verily, we cannot
in Meralco , because of the general but unsubstantiated statement in the Decision that the
countenance this procedure because this could unduly deprive labor of its right to a just share
wage award was based on factors like the bargaining history, trends of arbitrated and agreed
in the fruits of production29 and provide employers with a means to understate their
awards, and industry trends. In fine, there is no way of determining if the Secretary of Labor
profitability in order to defeat the right of labor to a just wage.
utilized the proper evidence, figures or data in arriving at the subject wage award as well as
the reasonableness thereof. This falls short of the requirement of administrative due process
We also note with disapproval the manner by which the Secretary of Labor issued the wage obligating the decision-maker to adjudicate the rights of the parties in such a manner that
award in this case, effectively paying lip service to the guidelines we laid down in Meralco. To they can know the various issues involved and the reasons for the decision rendered. 31
elaborate, the Secretary of Labor held:
Based on the foregoing, we hold that the Secretary of Labor gravely abused her discretion in
Based on such factors as BARGAINING HISTORY, TRENDS OFARBITRATED AND AGREED making the subject wage award. The appellate court, thus, correctly remanded this case to
AWARDS AND INDUSTRY TRENDS, in general, we hold that vis-à-vis the Union’s demands the Secretary of Labor for the proper determination of the wage award which should utilize,
and the Company’s offers, as follows: among others, the audited financial statements of petitioner corporation and state with
sufficient clarity the facts and law on which the wage award is based.
UNION[’S] DEMANDS COMPANY’S OFFERS

For the FIRST YEAR: ₱36 For the First 18 months: ₱18
182
The modification of the arbitral award
on health benefits from ₱1,300.00 to
₱1,390.00 was proper.
The CA held that the Secretary of Labor gravely abused her discretion when the latter awarded
₱1,300.00 as premium payment for each covered employee because the minutes of the
October 17, 2003 collective bargaining negotiations between the parties showed that they
had previously agreed to a higher ₱1,390.00 premium payment for each covered employee.
However, petitioner corporation claims that it never agreed to this higher amount as borne
out by the same minutes. The final offer of petitioner corporation on this item was allegedly
to provide only ₱1,300.00 (not ₱1,390.00) as premium payment for each covered employee.
We have reviewed the minutes32 of the October 17, 2003 collective bargaining negotiations
adverted to by both parties. A fair reading thereof indicates that the issue of premium
payments underwent several proposals and counter-proposals from petitioner corporation and
respondent union, respectively. The last proposal of petitioner corporation relative thereto
was to allot ₱1,390.00 as premium payment per covered employee provided that it (petitioner
corporation) would not shoulder the premium payments of the employee’s dependents. For
its part, respondent union accepted the proposal provided that the premium payment would
be renegotiated on the second and third years of the CBA. Consequently, both parties agreed
at the minimum that the premium payment shall be ₱1,390.00 per covered employee and the
remaining point of contention was whether the premium payment could be renegotiated on
the second and third years of the CBA. It was, thus, grave abuse of discretion on the part of
the Secretary of Labor to reduce the award to ₱1,300.00 which is below the minimum of
₱1,390.00 previously agreed upon by the parties. We also note that in the proceedings before
the CA, respondent union only pleaded for the award of the ₱1,390.00 premium payment per
covered employee33 thereby effectively waiving its proposal on the renegotiation of the
premium payment on the second and third years of the CBA.
WHEREFORE, the Petition is DENIED. The February 17, 2006 Amended Decision of the Court
of Appeals in CA-G.R. SP Nos. 80839, 81639, and 83168 is AFFIRMED.
Costs against petitioner.
SO ORDERED.
G.R. No. 163431 August 28, 2013
NATHANIEL N. DONGON, PETITIONER,
vs.
RAPID MOVERS AND FORWARDERS CO., INC., AND/OR NICANOR E. JAO, JR.,
RESPONDENTS.
DECISION
BERSAMIN, J.:
The prerogative of the employer to dismiss an employee on the ground of willful disobedience
to company policies must be exercised in good faith and with due regard to the rights of labor.
The Case
By petition for review on certiorari, petitioner appeals the adverse decision promulgated on
October 24, 2003,1 whereby the Court of Appeals (CA) set aside the decision dated June 17,
2002 of the National Labor Relations Commission (NLRC) in his favor. 2 The NLRC had thereby
reversed the ruling dated September 10, 2001 of the Labor Arbiter dismissing his complaint
for illegal dismissal.3
Antecedents
The following background facts of this case are stated in the CA’s assailed decision, viz:
From the records, it appears that petitioner Rapid is engaged in the hauling and trucking
business while private respondent Nathaniel T. Dongon is a former truck helper leadman.
Private respondent’s area of assignment is the Tanduay Otis Warehouse where he has a job
of facilitating the loading and unloading [of the] petitioner’s trucks. On 23 April 2001, private
respondent and his driver, Vicente Villaruz, were in the vicinity of Tanduay as they tried to
get some goods to be distributed to their clients.
Tanduay’s security guard called the attention of private respondent as to the fact that Mr.
Villaruz’[s] was not wearing an Identification Card (I.D. Card). Private respondent, then,
assured the guard that he will secure a special permission from the management to warrant
the orderly release of goods.
Instead of complying with his compromise, private respondent lent his I.D. Card to Villaruz;
and by reason of such misrepresentation , private respondent and Mr. Villaruz got a clearance
from Tanduay for the release of the goods. However, the security guard, who saw the
misrepresentation committed by private respondent and Mr. Villaruz, accosted them and
reported the matter to the management of Tanduay.
On 23 May 2001, after conducting an administrative investigation, private respondent was
dismissed from the petitioning Company.
On 01 June 2001, private respondent filed a Complaint for Illegal Dismissal. x x x 4
In his decision, the Labor Arbiter dismissed the complaint, and ruled that respondent Rapid
Movers and Forwarders Co., Inc. (Rapid Movers) rightly exercised its prerogative to dismiss
183
petitioner, considering that: (1) he had admitted lending his company ID to driver Vicente
Villaruz; (2) his act had constituted mental dishonesty and deceit amounting to breach of
trust; (3) Rapid Movers’ relationship with Tanduay had been jeopardized by his act; and (4)
he had been banned from all the warehouses of Tanduay as a result, leaving Rapid Movers
with no available job for him.5
On appeal, however, the NLRC reversed the Labor Arbiter, and held that Rapid Movers had
not discharged its burden to prove the validity of petitioner’s dismissal from his employment.
It opined that Rapid Movers did not suffer any pecuniary damage from his act; and that his
dismissal was a penalty disproportionate to the act of petitioner complained of. It awarded
him backwages and separation pay in lieu of reinstatement, to wit:
WHEREFORE, the decision appealed from is REVERSED and SET ASIDE and a new one
ENTERED ordering the payment of his backwages from April 25, 2001 up to the finality of this
decision and in lieu of reinstatement, he should be paid his separation pay from date of hire
on May 2, 1994 up to the finality hereof.
SO ORDERED.6
Rapid Movers brought a petition for certiorari in the CA, averring grave abuse of discretion on
the part of the NLRC, to wit:
I.
x x x IN STRIKING DOWN THE DISMISSAL OF THE PRIVATE RESPONDENT [AS] ILLEGAL
ALLEGEDLY FOR BEING GROSSLY DISPROPORTIONATE TO THE OFFENSE COMMITTED IN
THAT NEITHER THE PETITIONERS NOR ITS CLIENT TANDUAY SUFFERED ANY PECUNIARY
DAMAGE THEREFROM THEREBY IMPLYING THAT FOR A DISHONEST ACT/MISCONDUCT TO
BE A GROUND FOR DISMISSAL OF AN EMPLOYEE, THE SAME MUST AT LEAST HAVE RESULTED
IN PECUNIARY DAMAGE TO THE EMPLOYER;
II.
x x x IN EXPRESSING RESERVATION ON THE GUILT OF THE PRIVATE RESPONDENT IN THE
LIGHT OF ITS PERCEIVED CONFLICTING DATES OF THE LETTER OF TANDUAY TO RAPID
MOVERS (JANUARY 25, 2001) AND THE OCCURRENCE OF THE INCIDENT ON APRIL 25, 2001
WHEN SAID CONFLICT OF DATES CONSIDERING THE EVIDENCE ON RECORD, WAS MORE
APPARENT THAN REAL.7
Ruling of the CA
On October 24, 2003, the CA promulgated its assailed decision reinstating the decision of the
Labor Arbiter, and upholding the right of Rapid Movers to discipline its workers, holding thusly:
There is no dispute that the private respondent lent his I.D. Card to another employee who
used the same in entering the compound of the petitioner customer, Tanduay. Considering
that this amounts to dishonesty and is provided for in the petitioning Company’s Manual of
Discipline, its imposition is but proper and appropriate.
It is basic in any enterprise that an employee has the obligation of following the rules and
regulations of its employer. More basic further is the elementary obligation of an employee to
be honest and truthful in his work. It should be noted that honesty is one of the foremost
criteria of an employer when hiring a prospective employee. Thus, we see employers requiring
an NBI clearance or police clearance before formally accepting an applicant as their employee.
Such rules and regulations are necessary for the efficient operation of the business.
Employees who violate such rules and regulations are liable for the penalties and sanctions
so provided, e.g., the Company’s Manual of Discipline (as in this case) and the Labor Code.
The argument of the respondent commission that no pecuniary damage was sustained is off-
tangent with the facts of the case. The act of lending an ID is an act of dishonesty to which
no pecuniary estimate can be ascribed for the simple reason that no monetary equation is
involved. What is involved is plain and simple adherence to truth and violation of the rules.
The act of uttering or the making of a falsehood does not need any pecuniary estimate for
the act to gestate to one punishable under the labor laws. In this case, the illegal use of the
I.D. Card while it may appear to be initially trivial is of crucial relevance to the petitioner’s
customer, Tanduay, which deals with drivers and leadmen withdrawing goods and
merchandise from its warehouse. For those with criminal intentions can use another’s ID to
asport goods and merchandise.
Hence, while it can be conceded that there is no pecuniary damage involved, the fact remains
that the offense does not only constitute dishonesty but also willful disobedience to the lawful
order of the Company, e.g., to observe at all time the terms and conditions of the Manual of
Discipline. Article 282 of the Labor Code provides:
"Termination by Employer – An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
x x x." (Emphasis, supplied)
The constitutional protection afforded to labor does not condone wrongdoings by the
employee; and an employer’s power to discipline its workers is inherent to it. As honesty is
always the best policy, the Court is convinced that the ruling of the Labor Arbiter is more in
accord with the spirit of the Labor Code. "The Constitutional policy of providing full protection
to labor is not intended to oppress or destroy management (Capili vs. NLRC, 270 SCRA
184
488[1997]." Also, in Atlas Fertilizer Corporation vs. NLRC, 273 SCRA 549 [1997], the Highest
Magistrate declared that "The law, in protecting the rights of the laborers, authorizes neither
oppression nor self-destruction of the employer."
WHEREFORE, premises considered, the Petition is GRANTED. The assailed 17 June 2002
Decision of respondent Commission in NLRC CA-029937-01 is hereby SET ASIDE and the 10
September 2001 Decision of Labor Arbiter Vicente R. Layawen is ordered REINSTATED. No
costs.
SO ORDERED.8
Petitioner moved for a reconsideration, but the CA denied his motion on March 22, 2004. 9
Undaunted, the petitioner is now on appeal.
Issue
Petitioner still asserts the illegality of his dismissal, and denies being guilty of willful
disobedience. He contends that:
THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN SUSTAINING
THE DECISION DATED 10 SEPTEMBER 2001 OF LABOR ARBITER VICENTE R. LAYAWEN
WHERE THE LATTER RULED THAT BY LENDING HIS ID TO VILLARUZ, PETITIONER
(COMPLAINANT) COMMITTED MISREPRESENTATION AND DECEIT CONSTITUTING MENTAL
DISHONESTY WHICH CANNOT BE DISCARDED AS INSIGNIFICANT OR TRIVIAL. 10
Petitioner argues that his dismissal was discriminatory because Villaruz was retained in his
employment as driver; and that the CA gravely abused its discretion in disregarding his
showing that he did not violate Rapid Movers’ rules and regulations but simply performed his
work in line with the duties entrusted to him, and in not appreciating his good faith and lack
of any intention to willfully disobey the company’s rules.
In its comment,11 Rapid Movers prays that the petition for certiorari be dismissed for being
an improper remedy and apparently resorted to as a substitute for a lost appeal; and insists
that the CA did not commit grave abuse of discretion.1âwphi1
In his reply, 12
petitioner submits that his dismissal was a penalty too harsh and
disproportionate to his supposed violation; and that his dismissal was inappropriate due to
the violation being his first infraction that was even committed in good faith and without
malice.
Based on the parties’ foregoing submissions, the issues to be resolved are, firstly: Was the
petition improper and dismissible?; and, secondly: If the petition could prosper, was the
dismissal of petitioner on the ground of willful disobedience to the company regulation lawful?
Ruling
The petition has merit.
1.
Petition should not be dismissed
In St. Martin Funeral Home v. National Labor Relations Commission,13 the Court has clarified
that parties seeking the review of decisions of the NLRC should file a petition for certiorari in
the CA on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of the NLRC. Thereafter, the remedy of the aggrieved party from the CA decision
is an appeal via petition for review on certiorari. 14
The petition filed here is self-styled as a petition for review on certiorari, but Rapid Movers
points out that the petition was really one for certiorari under Rule 65 of the Rules of Court
due to its basis being the commission by the CA of a grave abuse of its discretion and because
the petition was filed beyond the reglementary period of appeal under Rule 45. Hence, Rapid
Movers insists that the Court should dismiss the petition because certiorari under Rule 65
could not be a substitute of a lost appeal under Rule 45.
Ordinarily, an original action for certiorari will not prosper if the remedy of appeal is available,
for an appeal by petition for review on certiorari under Rule 45 of the Rules of Court and an
original action for certiorari under Rule 65 of the Rules of Court are mutually exclusive, not
alternative nor successive, remedies.15 On several occasions, however, the Court has treated
a petition for certiorari as a petition for review on certiorari when: (a) the petition has been
filed within the 15-day reglementary period;16 (b) public welfare and the advancement of
public policy dictate such treatment; (c) the broader interests of justice require such
treatment; (d) the writs issued were null and void; or (e) the questioned decision or order
amounts to an oppressive exercise of judicial authority.17
The Court deems it proper to allow due course to the petition as one for certiorari under Rule
65 in the broader interest of substantial justice, particularly because the NLRC’s appellate
adjudication was set aside by the CA, and in order to put at rest the doubt that the CA, in so
doing, exercised its judicial authority oppressively. Whether the petition was proper or not
should be of less importance than whether the CA gravely erred in undoing and setting aside
the determination of the NLRC as a reviewing forum vis-à-vis the Labor Arbiter. We note in
this regard that the NLRC had declared the dismissal of petitioner to be harsh and not
commensurate to the infraction committed. Given the spirit and intention underlying our labor
laws of resolving a doubtful situation in favor of the working man, we will have to review the
185
judgment of the CA to ascertain whether the NLRC had really committed grave abuse of its
discretion. This will settle the doubts on the propriety of terminating petitioner, and at the
same time ensure that justice is served to the parties.18
2.
Petitioner was not guilty of willful disobedience; hence, his dismissal was illegal
Petitioner maintains that willful disobedience could not be a ground for his dismissal because
he had acted in good faith and with the sole intention of facilitating deliveries for Rapid Movers
when he allowed Villaruz to use his company ID.
Willful disobedience to the lawful orders of an employer is one of the valid grounds to
terminate an employee under Article 296 (formerly Article 282) of the Labor Code. 19 For willful
disobedience to be a ground, it is required that: (a) the conduct of the employee must be
willful or intentional; and (b) the order the employee violated must have been reasonable,
lawful, made known to the employee, and must pertain to the duties that he had been
engaged to discharge.20 Willfulness must be attended by a wrongful and perverse mental
attitude rendering the employee’s act inconsistent with proper subordination. 21 In any case,
the conduct of the employee that is a valid ground for dismissal under the Labor Code
constitutes harmful behavior against the business interest or person of his employer. 22 It is
implied that in every act of willful disobedience, the erring employee obtains undue advantage
detrimental to the business interest of the employer.
Under the foregoing standards, the disobedience attributed to petitioner could not be justly
characterized as willful within the contemplation of Article 296 of the Labor Code. He neither
benefitted from it, nor thereby prejudiced the business interest of Rapid Movers. His
explanation that his deed had been intended to benefit Rapid Movers was credible. There
could be no wrong or perversity on his part that warranted the termination of his employment
based on willful disobedience.
Rapid Movers argues, however, that the strict implementation of company rules and
regulations should be accorded respect as a valid exercise of its management prerogative. It
posits that it had the prerogative to terminate petitioner for violating its following company
rules and regulations, to wit:
(a) "Pagpayag sa paggamit ng iba o paggamit ng maling rekord ng kumpanya kaugnay sa
operations, maintenance or materyales o trabaho" (Additional Rules and Regulations No. 2);
and
(b) "Pagkutsaba sa pagplano o pagpulong sa ibang tao upang labagin ang anumang
alituntunin ng kumpanya" (Article 5.28).23
We cannot sustain the argument of Rapid Movers.
It is true that an employer is given a wide latitude of discretion in managing its own affairs.
The broad discretion includes the implementation of company rules and regulations and the
imposition of disciplinary measures on its employees. But the exercise of a management
prerogative like this is not limitless, but hemmed in by good faith and a due consideration of
the rights of the worker.24 In this light, the management prerogative will be upheld for as
long as it is not wielded as an implement to circumvent the laws and oppress labor. 25
To us, dismissal should only be a last resort, a penalty to be meted only after all the relevant
circumstances have been appreciated and evaluated with the goal of ensuring that the ground
for dismissal was not only serious but true. The cause of termination, to be lawful, must be a
serious and grave malfeasance to justify the deprivation of a means of livelihood. This
requirement is in keeping with the spirit of our Constitution and laws to lean over backwards
in favor of the working class, and with the mandate that every doubt must be resolved in
their favor.26
Although we recognize the inherent right of the employer to discipline its employees, we
should still ensure that the employer exercises the prerogative to discipline humanely and
considerately, and that the sanction imposed is commensurate to the offense involved and to
the degree of the infraction. The discipline exacted by the employer should further consider
the employee’s length of service and the number of infractions during his employment. 27 The
employer should never forget that always at stake in disciplining its employee are not only
his position but also his livelihood,28 and that he may also have a family entirely dependent
on his earnings.29
Considering that petitioner’s motive in lending his company ID to Villaruz was to benefit Rapid
Movers as their employer by facilitating the loading of goods at the Tanduay Otis Warehouse
for distribution to Rapid Movers’ clients, and considering also that petitioner had rendered
seven long unblemished years of service to Rapid Movers, his dismissal was plainly
unwarranted. The NLRC’s reversal of the decision of the Labor Arbiter by holding that penalty
too harsh and disproportionate to the wrong attributed to him was legally and factually
justified, not arbitrary or whimsical. Consequently, for the CA to pronounce that the NLRC
had thereby gravely abused its discretion was not only erroneous but was itself a grave abuse
of discretion amounting to lack of jurisdiction for not being in conformity with the pertinent
laws and jurisprudence. We have held that a conclusion or finding derived from erroneous
considerations is not a mere error of judgment but one tainted with grave abuse of
discretion.30
WHEREFORE, the Court GRANTS the petition; REVERSES and SETS ASIDE the decision
promulgated by the Court of Appeals on October 24, 2003; REINSTATES the decision of the
National Labor Relations Commission rendered on June 17, 2002; and ORDERS respondents
to pay the costs of suit.
SO ORDERED.
186
G.R. No. 190515 November 15, 2010
CIRTEK EMPLOYEES LABOR UNION-FEDERATION OF FREE WORKERS, Petitioner,
vs.
CIRTEK ELECTRONICS, INC., Respondent.
DECISION
CARPIO MORALES, J.:
Cirtek Electronics, Inc. (respondent), an electronics and semi-conductor firm situated inside
the Laguna Technopark, had an existing Collective Bargaining Agreement (CBA) with Cirtek
Employees Labor Union-Federation of Free Workers (petitioner) for the period January 1, 2001
up to December 31, 2005. Prior to the 3rd year of the CBA, the parties renegotiated its
economic provisions but failed to reach a settlement, particularly on the issue of wage
increases. Petitioner thereupon declared a bargaining deadlock and filed a Notice of Strike
with the National Conciliation and Mediation Board-Regional Office No. IV (NCMB-RO IV) on
April 26, 2004. Respondent, upon the other hand, filed a Notice of Lockout on June 16, 2004.
While the conciliation proceedings were ongoing, respondent placed seven union officers
including the President, a Vice President, the Secretary and the Chairman of the Board of
Directors under preventive suspension for allegedly spearheading a boycott of overtime work.
The officers were eventually dismissed from employment, prompting petitioner to file another
Notice of Strike which was, after conciliation meetings, converted to a voluntary arbitration
case. The dismissal of the officers was later found to be legal, hence, petitioner appealed.
In the meantime, as amicable settlement of the CBA was deadlocked, petitioner went on strike
on June 20, 2005. By Order1 dated June 23, 2005, the Secretary of Labor assumed jurisdiction
over the controversy and issued a Return to Work Order which was complied with.
Before the Secretary of Labor could rule on the controversy, respondent created a Labor
Management Council (LMC) through which it concluded with the remaining officers of
petitioner a Memorandum of Agreement (MOA)2 providing for daily wage increases of ₱6.00
per day effective January 1, 2004 and ₱9.00 per day effective January 1, 2005. Petitioner
submitted the MOA via Motion and Manifestation3 to the Secretary of Labor, alleging that the
remaining officers signed the MOA under respondent’s assurance that should the Secretary
order a higher award of wage increase, respondent would comply.
By Order4 dated March 16, 2006, the Secretary of Labor resolved the CBA deadlock by
awarding a wage increase of from ₱6.00 to ₱10.00 per day effective January 1, 2004 and
from ₱9.00 to ₱15.00 per day effective January 1, 2005, and adopting all other benefits as
embodied in the MOA.
Respondent moved for a reconsideration of the Decision as petitioner’s vice-president
submitted a "Muling Pagpapatibay ng Pagsang-ayon sa Kasunduan na may Petsang ika-4 ng
Agosto 2005,"5 stating that the union members were waiving their rights and benefits under
the Secretary’s Decision. Reconsideration of the Decision was denied by Resolution 6 of August
12, 2008, hence, respondent filed a petition for certiorari before the Court of Appeals.
By Decision7 of September 24, 2009, the appellate court ruled in favor of respondent and
accordingly set aside the Decision of the Secretary of Labor. It held that the Secretary of
Labor gravely abused his discretion in not respecting the MOA. It did not give credence to the
minutes of the meeting8 that attended the forging of the MOA as it was not verified, nor to
the "Paliwanag"9 submitted by respondent union members explaining why they signed the
MOA as it was not notarized.
Petitioner’s motion for reconsideration having been denied by Resolution10 of December 2,
2009, the present petition was filed, maintaining that the Secretary of Labor’s award is in
order, being in accord with the parties’ CBA history ─ respondent having already granted
₱15.00 per day for 2001, ₱10.00 per day for 2002, and ₱10.00 per day for 2003, and that the
Secretary has the power to grant awards higher than what are stated in the CBA.
Respecting the MOA, petitioner posits that it was "surreptitiously entered into [in] bad faith,"
it having been forged without the assistance of the Federation of Free Workers or counsel,
adding that respondent could have waited for the Secretary’s resolution of the pending CBA
deadlock or that the MOA could have been concluded before representatives of the Secretary
of Labor.
The relevant issues for resolution are 1) whether the Secretary of Labor is authorized to give
an award higher than that agreed upon in the MOA, and 2) whether the MOA was entered
into and ratified by the remaining officers of petitioner under the condition, which was not
incorporated in the MOA, that respondent would honor the Secretary of Labor’s award in the
event that it is higher.
The Court resolves both issues in the affirmative.
It is well-settled that the Secretary of Labor, in the exercise of his power to assume jurisdiction
under Art. 263 (g)11 of the Labor Code, may resolve all issues involved in the controversy
including the award of wage increases and benefits.12 While an arbitral award cannot per se
be categorized as an agreement voluntarily entered into by the parties because it requires
the intervention and imposing power of the State thru the Secretary of Labor when he
assumes jurisdiction, the arbitral award can be considered an approximation of a collective
bargaining agreement which would otherwise have been entered into by the parties, hence,
it has the force and effect of a valid contract obligation.13
That the arbitral award was higher than that which was purportedly agreed upon in the MOA
is of no moment. For the Secretary, in resolving the CBA deadlock, is not limited to considering
187
the MOA as basis in computing the wage increases. He could, as he did, consider the financial
documents14 submitted by respondent as well as the parties’ bargaining history and
respondent’s financial outlook and improvements as stated in its website.15
It bears noting that since the filing and submission of the MOA did not have the effect of
divesting the Secretary of his jurisdiction, or of automatically disposing the controversy, then
neither should the provisions of the MOA restrict the Secretary’s leeway in deciding the
matters before him.1avvphi1
The appellate court’s brushing aside of the "Paliwanag" and the minutes of the meeting that
resulted in the conclusion of the MOA because they were not verified and notarized, thus
violating, so the appellate court reasoned, the rules on parol evidence, does not lie. Like any
other rule on evidence, parol evidence should not be strictly applied in labor cases.
The reliance on the parol evidence rule is misplaced. In labor cases pending before the
Commission or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity
are not controlling. Rules of procedure and evidence are not applied in a very rigid and
technical sense in labor cases. Hence, the Labor Arbiter is not precluded from accepting and
evaluating evidence other than, and even contrary to, what is stated in the CBA. 16 (emphasis
supplied)
While a contract constitutes the law between the parties, this is so in the present case with
respect to the CBA, not to the MOA in which even the union’s signatories had expressed
reservations thereto. But even assuming arguendo that the MOA is treated as a new CBA,
since it is imbued with public interest, it must be construed liberally and yield to the common
good.
While the terms and conditions of a CBA constitute the law between the parties, it is not,
however, an ordinary contract to which is applied the principles of law governing ordinary
contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code
of the Philippines which governs the relations between labor and capital, is not merely
contractual in nature but impressed with public interest, thus, it must yield to the common
good. As such, it must be construed liberally rather than narrowly and technically, and the
courts must place a practical and realistic construction upon it, giving due consideration to
the context in which it is negotiated and purpose which it is intended to serve. 17 (emphasis
and underscoring supplied)
WHEREFORE, the petition is GRANTED. The Decision dated September 24, 2009 and the
Resolution dated December 2, 2009 of the Court of Appeals are REVERSED and SET ASIDE
and the Order dated March 16, 2006 and Resolution dated August 12, 2008 of the Secretary
of Labor are REINSTATED.
SO ORDERED.
G.R. No. 171231 February 17, 2010
PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION WORKERS
ORGANIZATION (PSTMSDWO), represented by its President, RENE SORIANO,
Petitioner,
vs.
PNCC SKYWAY CORPORATION, Respondent.
DECISION
PERALTA, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
seeking to set aside the Decision1 and the Resolution2 of the Court of Appeals (CA) in CA-G.R.
SP. No. 87069, which annulled and set aside the Decision and Order of the Voluntary
Arbitrator dated July 12, 2004 and August 11, 2004, respectively.
The factual antecedents are as follows:
Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers'
Organization (PSTMSDWO) is a labor union duly registered with the Department of Labor and
Employment (DOLE). Respondent PNCC Skyway Corporation is a corporation duly organized
and operating under and by virtue of the laws of the Philippines.
On November 15, 2002, petitioner and respondent entered into a Collective Bargaining
Agreement (CBA) incorporating the terms and conditions of their agreement which included
vacation leave and expenses for security license provisions.
The pertinent provisions of the CBA relative to vacation leave and sick leave are as follows:
ARTICLE VIII
VACATION LEAVE AND SICK LEAVE
Section 1. Vacation Leave.
[a] Regular Employees covered by the bargaining unit who have completed at least one [1]
year of continuous service shall be entitled to vacation leave with pay depending on the length
of service as follows:
1-9 years of service - 15 working days
10-15 years of service - 16 working days
188
16-20 years of service - 17 working days
21-25 years of service - 18 working days
26 and above years of service - 19 working days.
[b] The company shall schedule the vacation leave of employees during the year
taking into consideration the request of preference of the employees.(emphasis
supplied)
[c] Any unused vacation leave shall be converted to cash and shall be paid to the employees
on the first week of December each year."
ARTICLE XXI
Section 6. Security License – All covered employees must possess a valid License [Security
Guard License] issued by the Chief, Philippine National Police or his duly authorized
representative, to perform his duties as security guard. All expenses of security guard in
securing/renewing their licenses shall be for their personal account. Guards,
securing/renewing their license must apply for a leave of absence and/or a change of
schedule. Any guard who fails to renew his security guard license should be placed on forced
leave until such time that he can present a renewed security license.
In a Memorandum dated December 29, 2003, 3 respondent's Head of the Traffic Management
and Security Department (TMSD) published the scheduled vacation leave of its TMSD
personnel for the year 2004. Thereafter, the Head of the TMSD issued a Memorandum 4 dated
January 9, 2004 to all TMSD personnel. In the said memorandum, it was provided that:
SCHEDULED VACATION LEAVE WITH PAY.
The 17 days (15 days SVL plus 2-day-off) scheduled vacation leave (SVL) with pay for the
year 2004 had been published for everyone to take a vacation with pay which will be our
opportunity to enjoy quality time with our families and perform our other activities requiring
our personal attention and supervision. Swapping of SVL schedule is allowed on a one-on-one
basis by submitting a written request at least 30 days before the actual schedule of SVL duly
signed by the concerned parties. However, the undersigned may consider the re-scheduling
of the SVL upon the written request of concerned TMSD personnel at least 30 days before the
scheduled SVL. Re-scheduling will be evaluated taking into consideration the TMSDs
operational requirement.
Petitioner objected to the implementation of the said memorandum. It insisted that the
individual members of the union have the right to schedule their vacation leave. It opined
that the unilateral scheduling of the employees' vacation leave was done to avoid the
monetization of their vacation leave in December 2004. This was allegedly apparent in the
memorandum issued by the Head HRD,5 addressed to all department heads, which provides:
FOR : All Dept. Heads
FROM : Head, HRD
SUBJECT : Leave Balances as of January 01, 2004
DATE : January 9, 2004
We are furnishing all the departments the leave balances of their respective staff as of January
01, 2004, so as to have them monitor and program the schedule of such leave.
Please consider the leave credit they earned each month [1-2-0], one day and two hours in
anticipation of the later schedule. As we are targeting the zero conversion comes December
2004, it is suggested that the leave balances as of to date be given preferential scheduling.
x x x.
Petitioner also demanded that the expenses for the required in-service training of its member
security guards, as a requirement for the renewal of their license, be shouldered by the
respondent. However, the respondent did not accede to petitioner's demands and stood firm
on its decision to schedule all the vacation leave of petitioner's members.
Due to the disagreement between the parties, petitioner elevated the matter to the DOLE-
NCMB for preventive mediation. For failure to settle the issue amicably, the parties agreed to
submit the issue before the voluntary arbitrator.
The voluntary arbitrator issued a Decision dated July 12, 2004, the dispositive portion of which
reads:
WHEREFORE, premises all considered, declaring that:
a) The scheduling of all vacation leaves under Article VIII, Section 6, thereof, shall be under
the discretion of the union members entitled thereto, and the management to convert them
into cash all the leaves which the management compelled them to use.
b) To pay the expenses for the in-service-training of the company security guards, as a
requirement for renewal of licenses, shall not be their personal account but that of the
company.
All other claims are dismissed for lack of merit.
189
SO ORDERED.6
Respondent filed a motion for reconsideration, which the voluntary arbitrator denied in the
Order7 dated August 11, 2004.
Aggrieved, on October 22, 2004, respondent filed a Petition for Certiorari with Prayer for
Temporary Restraining Order and/or Writ of Preliminary Injunction with the CA, and the CA
rendered a Decision dated October 4, 2005,8 annulling and setting aside the decision and
order of the voluntary arbitrator. The CA ruled that since the provisions of the CBA were clear,
the voluntary arbitrator has no authority to interpret the same beyond what was expressly
written.
Petitioner filed a motion for reconsideration, which the CA denied through a Resolution dated
January 23, 2006.9 Hence, the instant petition assigning the following errors:
I not a jurisdictional, requirement.
WITH ALL DUE RESPECT, THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS
[THIRTEENTH DIVISION] ERRED IN HOLDING THAT:
A) THE MANAGEMENT HAS THE SOLE DISCRETION TO SCHEDULE THE VACATION LEAVE OF
HEREIN PETITIONER.
B) THE MANAGEMENT IS NOT LIABLE FOR THE IN-SERVICE-TRAINING OF THE SECURITY
GUARDS.
II
THE HONORABLE PUBLIC RESPONDENT ERRED IN OVERSEEING THE CONVERSION ASPECT
OF THE UNUSED LEAVE.
Before considering the merits of the petition, We shall first address the objection based on
technicality raised by respondent.
Respondent alleged that the petition was fatally defective due to the lack of authority of its
union president, Rene Soriano, to sign the certification and verification against forum
shopping on petitioner's behalf. It alleged that the authority of Rene Soriano to represent the
union was only conferred on June 30, 2006 by virtue of a board resolution, 10 while the Petition
for Review had long been filed on February 27, 2006. Thus, Rene Soriano did not possess the
required authority at the time the petition was filed on February 27, 2006.
The petitioner countered that the Board Resolution 11 dated June 30, 2006 merely reiterated
the authority given to the union president to represent the union, which was conferred as
early as October 2005. The resolution provides in part that:
WHEREAS, in a meeting duly called for October 2005, the Union decided to file a Motion for
Reconsideration and if the said motion be denied, to file a petition before the Supreme Court.
(Emphasis supplied)
Thus, the union president, representing the union, was clothed with authority to file the
petition on February 27, 2006.
The purpose of requiring verification is to secure an assurance that the allegations in the
petition have been made in good faith; or are true and correct, not merely speculative. This
requirement is simply a condition affecting the form of pleadings, and non-compliance
therewith does not necessarily render it fatally defective. Truly, verification is only a formal,
With respect to the certification of non-forum shopping, it has been held that the certification
requirement is rooted in the principle that a party-litigant shall not be allowed to pursue
simultaneous remedies in different fora, as this practice is detrimental to an orderly judicial
procedure. However, this Court has relaxed, under justifiable circumstances, the rule
requiring the submission of such certification considering that, although it is obligatory, it is
not jurisdictional. Not being jurisdictional, it can be relaxed under the rule of substantial
compliance.12
In Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue,13 We said that:
In a slew of cases, however, we have recognized the authority of some corporate officers to
sign the verification and certification against forum shopping. In Mactan-Cebu International
Airport Authority v. CA, we recognized the authority of a general manager or acting general
manager to sign the verification and certificate against forum shopping; in Pfizer v. Galan, we
upheld the validity of a verification signed by an "employment specialist" who had not even
presented any proof of her authority to represent the company; in Novelty Philippines, Inc.,
v. CA, we ruled that a personnel officer who signed the petition but did not attach the authority
from the company is authorized to sign the verification and non-forum shopping certificate;
and in Lepanto Consolidated Mining Company v. WMC Resources International Pty. Ltd.
(Lepanto), we ruled that the Chairperson of the Board and President of the Company can sign
the verification and certificate against non-forum shopping even without the submission of
the board’s authorization.
In sum, we have held that the following officials or employees of the company can sign the
verification and certification without need of a board resolution: (1) the Chairperson of the
Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting
General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case.
190
While the above cases do not provide a complete listing of authorized signatories to the
verification and certification required by the rules, the determination of the sufficiency of the
authority was done on a case to case basis. The rationale applied in the foregoing cases is to
justify the authority of corporate officers or representatives of the corporation to sign the
verification or certificate against forum shopping, being "in a position to verify the truthfulness
and correctness of the allegations in the petition."
In the case at bar, We rule that Rene Soriano has sufficient authority to sign the verification
and certification against forum shopping for the following reasons: First, the resolution dated
June 30, 2006 was merely a reiteration of the authority given to the Union President to file a
case before this Court assailing the CBA violations committed by the management, which was
previously conferred during a meeting held on October 5, 2005. Thus, it can be inferred that
even prior to the filing of the petition before Us on February 27, 2006, the president of the
union was duly authorized to represent the union and to file a case on its behalf. Second,
being the president of the union, Rene Soriano is in a position to verify the truthfulness and
correctness of the allegations in the petition. Third, assuming that Mr. Soriano has no
authority to file the petition on February 27, 2006, the passing on June 30, 2006 of a Board
Resolution authorizing him to represent the union is deemed a ratification of his prior
execution, on February 27, 2006, of the verification and certificate of non-forum shopping,
thus curing any defects thereof. Ratification in agency is the adoption or confirmation by one
person of an act performed on his behalf by another without authority.14
We now go to the merits of the case.
Petitioner insisted that their union members have the preference in scheduling their vacation
leave. On the other hand, respondent argued that Article VIII, Section 1 (b) gives the
management the final say regarding the vacation leave schedule of its employees. Respondent
may take into consideration the employees' preferred schedule, but the same is not
controlling.
Petitioner also requested the respondent to provide and/or shoulder the expenses for the in-
service training of their members as a requirement for the renewal of the security guards'
license. Respondent did not accede to the union's request invoking the CBA provision which
states that all expenses of security guards in securing /renewing their license shall be for their
personal account. The petitioner further argued that any doubts or ambiguity in the
interpretation of the CBA should be resolved in favor of the laborer.
As to the issue on vacation leaves, the same has no merit.
The rule is that where the language of a contract is plain and unambiguous, its meaning
should be determined without reference to extrinsic facts or aids. The intention of the parties
must be gathered from that language, and from that language alone. Stated differently, where
the language of a written contract is clear and unambiguous, the contract must be taken to
mean that which, on its face, it purports to mean, unless some good reason can be assigned
to show that the words used should be understood in a different sense. 15
In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII,
Section 1 (b) of the CBA categorically provides that the scheduling of vacation leave shall be
under the option of the employer. The preference requested by the employees is not
controlling because respondent retains its power and prerogative to consider or to ignore said
request.
Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulation shall prevail. 16 In fine, the CBA must be strictly
adhered to and respected if its ends have to be achieved, being the law between the parties.
In Faculty Association of Mapua Institute of Technology (FAMIT) v. Court of Appeals, 17 this
Court held that the CBA during its lifetime binds all the parties. The provisions of the CBA
must be respected since its terms and conditions constitute the law between the parties. The
parties cannot be allowed to change the terms they agreed upon on the ground that the same
are not favorable to them.
As correctly found by the CA:
The words of the CBA were unequivocal when it provided that "The company shall schedule
the vacation leave of employees during the year taking into consideration the request of
preference of the employees." The word shall in this instance connotes an imperative
command, there being nothing to show a different intention. The only concession given under
the subject clause was that the company should take into consideration the preferences of
the employees in scheduling the vacations; but certainly, the concession never diminished
the positive right of management to schedule the vacation leaves in accordance with what
had been agreed and stipulated upon in the CBA.
There is, thus, no basis for the Voluntary Arbitrator to interpret the subject provision relating
to the schedule of vacation leaves as being subject to the discretion of the union members.
There is simply nothing in the CBA which grants the union members this right.
It must be noted the grant to management of the right to schedule vacation leaves is not
without good reason. Indeed, if union members were given the unilateral discretion to
schedule their vacation leaves, the same may result in significantly crippling the number of
key employees of the petitioner manning the toll ways on holidays and other peak seasons,
where union members may wittingly or unwittingly choose to have a vacation. Put another
way, the grant to management of the right to schedule vacation leaves ensures that there
would always be enough people manning and servicing the toll ways, which in turn assures
the public plying the same orderly and efficient toll way service.
191
Indeed, the multitude or scarcity of personnel manning the tollways should not rest upon the
option of the employees, as the public using the skyway system should be assured of its
safety, security and convenience.
Although the preferred vacation leave schedule of petitioner's members should be given
priority, they cannot demand, as a matter of right, that their request be automatically granted
by the respondent. If the petitioners were given the exclusive right to schedule their vacation
leave then said right should have been incorporated in the CBA. In the absence of such right
and in view of the mandatory provision in the CBA giving respondent the right to schedule
the vacation leave of its employees, compliance therewith is mandated by law.
In the grant of vacation leave privileges to an employee, the employer is given the leeway to
impose conditions on the entitlement to and commutation of the same, as the grant of
vacation leave is not a standard of law, but a prerogative of management.18 It is a mere
concession or act of grace of the employer and not a matter of right on the part of the
employee.19 Thus, it is well within the power and authority of an employer to impose certain
conditions, as it deems fit, on the grant of vacation leaves, such as having the option to
schedule the same.
Along that line, since the grant of vacation leave is a prerogative of the employer, the latter
can compel its employees to exhaust all their vacation leave credits. Of course, any vacation
leave credits left unscheduled by the employer, or any scheduled vacation leave that was not
enjoyed by the employee upon the employer's directive, due to exigencies of the service,
must be converted to cash, as provided in the CBA. However, it is incorrect to award payment
of the cash equivalent of vacation leaves that were already used and enjoyed by the
employees. By directing the conversion to cash of all utilized and paid vacation leaves, the
voluntary arbitrator has licensed unjust enrichment in favor of the petitioner and caused
undue financial burden on the respondent. Evidently, the Court cannot tolerate this.
It would seem that petitioner's goal in relentlessly arguing that its members preferred
vacation leave schedule should be given preference is not allowed to them to avail themselves
of their respective vacation leave credits at all but, instead, to convert these into cash.
In Cuajo v. Chua Lo Tan,20 We said that the purpose of a vacation leave is to afford a laborer
a chance to get a much-needed rest to replenish his worn-out energy and acquire a new
vitality to enable him to efficiently perform his duties, and not merely to give him additional
salary and bounty.
This purpose is manifest in the Memorandum dated January 9, 200421 addressed to all TMSD
Personnel which provides that:
SCHEDULED VACATION LEAVE WITH PAY
The 17 days (15 days SVL plus 2-Day-Off) scheduled vacation leave (SVL) with pay for the
year 2004 had been published for everyone to take a vacation with pay which will be our
opportunity to enjoy quality time with our families and perform our other activities
requiring our personal attention and supervision.(Emphasis ours.)
Accordingly, the vacation leave privilege was not intended to serve as additional salary, but
as a non-monetary benefit. To give the employees the option not to consume it with the aim
of converting it to cash at the end of the year would defeat the very purpose of vacation
leave.
Petitioner's contention that labor contracts should be construed in favor of the laborer is
without basis and, therefore, inapplicable to the present case. This rule of construction does
not benefit petitioners because, as stated, there is here no room for interpretation. Since the
CBA is clear and unambiguous, its terms should be implemented as they are written.
This brings Us to the issue of who is accountable for the in-service training of the security
guards. On this point, We find the petition meritorious.
Although it is a rule that a contract freely entered into between the parties should be
respected, since a contract is the law between the parties, there are, however, certain
exceptions to the rule, specifically Article 1306 of the Civil Code, which provides:
The contracting parties may establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law, morals, good customs, public
order, or public policy.
Moreover, the relations between capital and labor are not merely contractual. "They are so
impressed with public interest that labor contracts must yield to the common good x x x." 22
The supremacy of the law over contracts is explained by the fact that labor contracts are not
ordinary contracts; they are imbued with public interest and therefore are subject to the police
power of the state.23 However, it should not be taken to mean that provisions agreed upon in
the CBA are absolutely beyond the ambit of judicial review and nullification. If the provisions
in the CBA run contrary to law, public morals, or public policy, such provisions may very well
be voided.
In the present case, Article XXI, Section 6 of the CBA provides that "All expenses of security
guards in securing /renewing their licenses shall be for their personal account." A reading of
the provision would reveal that it encompasses all possible expenses a security guard would
pay or incur in order to secure or renew his license. In-service training is a requirement for
the renewal of a security guard’s license.24 Hence, following the aforementioned CBA
provision, the expenses for the same must be on the personal account of the employee.
However, the 1994 Revised Rules and Regulations Implementing Republic Act No. 5487
provides the following:
192
Section 17. Responsibility for Training and Progressive Development. It is the primary
responsibility of all operators private security agency and company security forces to maintain
and upgrade the standards of efficiency, discipline, performance and competence of their
personnel. To attain this end, each duly licensed private security agency and company security
force shall establish a staff position for training and appoint a training officer whose primary
functions are to determine the training needs of the agency/guards in relation to the needs
of the client/ market/ industry, and to supervise and conduct appropriate training
requirements. All private security personnel shall be re-trained at least once very two
years.1avvphi1
Section 12. In service training. - a. To maintain and/or upgrade the standard of efficiency,
discipline and competence of security guards and detectives, company security force and
private security agencies upon prior authority shall conduct-in-service training at least two
(2) weeks duration for their organic members by increments of at least two percent (2%) of
their total strength. Where the quality of training is better served by centralization,
the CSFD Directors may activate a training staff from local talents to assist. The cost
of training shall be pro-rated among the participating agencies/private companies.
All security officer must undergo in-service training at least once every two (2) years
preferably two months before his or her birth month.
Since it is the primary responsibility of operators of company security forces to maintain and
upgrade the standards of efficiency, discipline, performance and competence of their
personnel, it follows that the expenses to be incurred therein shall be for the personal account
of the company. Further, the intent of the law to impose upon the employer the obligation to
pay for the cost of its employees’ training is manifested in the aforementioned law’s provision
that Where the quality of training is better served by centralization, the CFSD Directors may
activate a training staff from local talents to assist. The cost of training shall be pro-rated
among the participating agencies/private companies. It can be gleaned from the said
provision that cost of training shall be pro-rated among participating agencies and companies
if the training is best served by centralization. The law mandates pro-rating of expenses
because it would be impracticable and unfair to impose the burden of expenses suffered by
all participants on only one participating agency or company. Thus, it follows that if there is
no centralization, there can be no pro-rating, and the company that has its own security forces
shall shoulder the entire cost for such training. If the intent of the law were to impose upon
individual employees the cost of training, the provision on the pro-rating of expenses would
not have found print in the law.
Further, petitioner alleged that prior to the inking of the CBA, it was the respondent company
providing for the in-service training of the guards.25 Respondent never controverted the said
allegation and is thus deemed to have admitted the same. 26 Implicit from respondent's
actuations was its acknowledgment of its legally mandated responsibility to shoulder the
expenses for in-service training.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decision and Resolution of the Court
of Appeals, dated October 4, 2005 and January 23, 2006, respectively, in CA-G.R. SP. No.
87069 is MODIFIED. The cost of in-service training of the respondent company's security
guards shall be at the expense of the respondent company. This case is remanded to the
voluntary arbitrator for the computation of the expenses incurred by the security guards for
their in-service training, and respondent company is directed to reimburse its security guards
for the expenses incurred.
SO ORDERED.
G.R. No. 178835 February 13, 2009
MAGIS YOUNG ACHIEVERS' LEARNING CENTER and MRS. VIOLETA T.
CARIÑO, Petitioners,
vs.
ADELAIDA P. MANALO, Respondent.
DECISION
NACHURA, J.:
This is a petition for review on certiorari of the Decision dated January 31, 2007 and of the
Resolution dated June 29, 2007 of the Court of Appeals (CA) in CA-G.R. SP No. 93917 entitled
Magis Young Achievers’ Learning Center and Violeta T. Cariño v. National Labor Relations
Commission, 3rd Division, Quezon City, and Adelaida P. Manalo.
The pertinent facts are as follows:
On April 18, 2002, respondent Adelaida P. Manalo was hired as a teacher and acting principal of
petitioner Magis Young Achievers’ Learning Center with a monthly salary of ₱15,000.00.
It appears on record that respondent, on March 29, 2003, wrote a letter of resignation addressed
to Violeta T. Cariño, directress of petitioner, which reads:
Dear Madame:
I am tendering my irrevocable resignation effective April 1, 2003 due to personal and family
reasons.
193
I would like to express my thanks and gratitude for the opportunity, trust and confidence given to
me as an Acting Principal in your prestigious school.
God bless and more power to you.
Sincerely yours,
(Signed)
Mrs. ADELAIDA P. MANALO1
On March 31, 2003, respondent received a letter of termination from petitioner, viz.:
Dear Mrs. Manalo:
Greetings of Peace!
The Board of Trustees of the Cariño Group of Companies, particularly that of Magis Young
Achievers’ Learning Center convened, deliberated and came up with a Board Resolution that
will strictly impose all means possible to come up with a cost-cutting scheme. Part of that
scheme is a systematic reorganization which will entail streamlining of human resources.
As agreed upon by the Board of Directors, the position of PRINCIPAL will be abolished next
school year. Therefore, we regret to inform you that we can no longer renew your contract,
which will expire on March 31, 2003. Thus, thank you for the input you have given to Magis
during your term of office as Acting Principal. The function of the said position shall be
delegated to other staff members in the organization.
Hoping for your understanding on this matter and we pray for your future endeavors.
Very truly yours,
(Signed)
Mrs. Violeta T. Cariño
School Directress
Noted by:
(Signed)
Mr. Severo Cariño
President2
On April 4, 2003, respondent instituted against petitioner a Complaint3 for illegal dismissal and
non-payment of 13th month pay, with a prayer for reinstatement, award of full backwages and
moral and exemplary damages.
In her position paper,4 respondent claimed that her termination violated the provisions of her
employment contract, and that the alleged abolition of the position of Principal was not among
the grounds for termination by an employer under Article 2825 of the Labor Code. She further
asserted that petitioner infringed Article 2836 of the Labor Code, as the required 30-day notice to
the Department of Labor and Employment (DOLE) and to her as the employee, and the payment
of her separation pay were not complied with. She also claimed that she was terminated from
service for the alleged expiration of her employment, but that her contract did not provide for a
fixed term or period. She likewise prayed for the payment of her 13th month pay under
Presidential Decree (PD) No. 851.
Petitioner, in its position paper,7 countered that respondent was legally terminated because the
one-year probationary period, from April 1, 2002 to March 3, 2003, had already lapsed and she
failed to meet the criteria set by the school pursuant to the Manual of Regulation for Private
Schools, adopted by the then Department of Education, Culture and Sports (DECS), paragraph
75 of which provides that:
(75) Full-time teachers who have rendered three years of satisfactory service shall be considered
permanent.
On December 3, 2003, Labor Arbiter (LA) Renell Joseph R. dela Cruz rendered a Decision8
dismissing the complaint for illegal dismissal, including the other claims of respondent, for lack
of merit, except that it ordered the payment of her 13th month pay in the amount of ₱3,750.00.
The LA ratiocinated in this wise:
It is our considered opinion [that] complainant was not dismissed, much less, illegally. On the
contrary, she resigned. It is hard for us to imagine complainant would accede to sign a
resignation letter as a precondition to her hiring considering her educational background. Thus,
in the absence of any circumstance tending to show she was probably coerced her resignation
must be upheld. x x x
194
x x x The agreement (Annex "1" to Respondent’s [petitioner’s] Position Paper; Annex "A" to
Complainant’s Position Paper) by its very nature and terms is a contract of employment with a
period (from 01 April 2002 to 31 March 2003, Annex ‘1’ to Respondent’s Position Paper).
Complainant’s observation that the space reserved for the duration and effectivity of the contract
was left blank (Annex ‘A’ to Complainant’s [respondent’s] Position Paper) to our mind is plain
oversight. Read in its entirety, it is a standard contract which by its very terms and conditions
speaks of a definite period of employment. The parties could have not thought otherwise. The
notification requirement in the contract in case of "termination before the expiration of the
period" confirms it. x x x
On appeal, on October 28, 2005, the National Labor Relations Commission (NLRC), Third
Division,9 in its Decision10 dated October 28, 2005, reversed the Arbiter’s judgment. Petitioner
was ordered to reinstate respondent as a teacher, who shall be credited with one-year service of
probationary employment, and to pay her the amounts of ₱3,750.00 and ₱325,000.00
representing her 13th month pay and backwages, respectively. Petitioner’s motion for
reconsideration was denied in the NLRC’s Resolution11 dated January 31, 2006.
Imputing grave abuse of discretion on the part of the NLRC, petitioner went up to the CA via a
petition for certiorari. The CA, in its Decision dated January 31, 2007, affirmed the NLRC
decision and dismissed the petition. It likewise denied petitioner’s motion for reconsideration in
the Resolution dated June 29, 2007. Hence, this petition anchored on the following grounds—
I. THE COURT OF APPEALS ERRED WHEN IT CONCLUDED THAT THE RESIGNATION
OF RESPONDENT MANALO DID NOT BECOME EFFECTIVE DUE TO ALLEGED LACK
OF ACCEPTANCE;
II. THE COURT OF APPEALS ERRED WHEN IT RULED THAT RESPONDENT MANALO
IS A PERMANENT EMPLOYEE;
III. THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE CONTRACT OF
EMPLOYMENT BETWEEN PETITIONER AND RESPONDENT DID NOT STIPULATE A
PERIOD.12
Before going to the core issues of the controversy, we would like to restate basic legal principles
governing employment of secondary school teachers in private schools, specifically, on the
matter of probationary employment.
A probationary employee or probationer is one who is on trial for an employer, during which the
latter determines whether or not he is qualified for permanent employment. The probationary
employment is intended to afford the employer an opportunity to observe the fitness of a
probationary employee while at work, and to ascertain whether he will become an efficient and
productive employee. While the employer observes the fitness, propriety and efficiency of a
probationer to ascertain whether he is qualified for permanent employment, the probationer, on
the other hand, seeks to prove to the employer that he has the qualifications to meet the
reasonable standards for permanent employment. Thus, the word probationary, as used to
describe the period of employment, implies the purpose of the term or period, not its length.13
Indeed, the employer has the right, or is at liberty, to choose who will be hired and who will be
declined. As a component of this right to select his employees, the employer may set or fix a
probationary period within which the latter may test and observe the conduct of the former
before hiring him permanently.14
But the law regulates the exercise of this prerogative to fix the period of probationary
employment. While there is no statutory cap on the minimum term of probation, the law sets a
maximum "trial period" during which the employer may test the fitness and efficiency of the
employee.
The general rule on the maximum allowable period of probationary employment is found in
Article 281 of the Labor Code, which states:
Art. 281. Probationary Employment. – Probationary employment shall not exceed six (6) months
from the date the employee started working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the employer at the time of
his engagement. An employee who is allowed to work after a probationary period shall be
considered a regular employee.1avvphi1.zw+
This upper limit on the term of probationary employment, however, does not apply to all classes
of occupations.
For "academic personnel" in private schools, colleges and universities, probationary employment
is governed by Section 92 of the 1992 Manual of Regulations for Private Schools15 (Manual),
which reads:
Section 92. Probationary Period. – Subject in all instances to compliance with the Department
and school requirements, the probationary period for academic personnel shall not be more than
three (3) consecutive years of satisfactory service for those in the elementary and secondary
195
levels, six (6) consecutive regular semesters of satisfactory service for those in the tertiary level,
and nine (9) consecutive trimesters of satisfactory service for those in the tertiary level where
collegiate courses are offered on a trimester basis.16
This was supplemented by DOLE-DECS-CHED-TESDA Order No. 1 dated February 7, 1996,
which provides that the probationary period for academic personnel shall not be more than three
(3) consecutive school years of satisfactory service for those in the elementary and secondary
levels.17 By this supplement, it is made clear that the period of probation for academic personnel
shall be counted in terms of "school years," and not "calendar years."18 Then, Section 4.m(4)[c]
of the Manual delineates the coverage of Section 92, by defining the term "academic personnel"
to include:
(A)ll school personnel who are formally engaged in actual teaching service or in research
assignments, either on full-time or part-time basis; as well as those who possess certain
prescribed academic functions directly supportive of teaching, such as registrars, librarians,
guidance counselors, researchers, and other similar persons. They include school officials
responsible for academic matters, and may include other school officials.19
The reason for this disparate treatment was explained many years ago in Escudero v. Office of
the President of the Philippines,20 where the Court declared:
However, the six-month probationary period prescribed by the Secretary of Labor is merely the
general rule. x x x
It is, thus, clear that the Labor Code authorizes different probationary periods, according to the
requirements of the particular job. For private school teachers, the period of probation is
governed by the 1970 Manual of Regulations for Private Schools x x x.21
The probationary period of three years for private school teachers was, in fact, confirmed earlier
in Labajo v. Alejandro,22 viz.:
The three (3)-year period of service mentioned in paragraph 75 (of the Manual of Regulations for
Private Schools) is of course the maximum period or upper limit, so to speak, of probationary
employment allowed in the case of private school teachers. This necessarily implies that a
regular or permanent employment status may, under certain conditions, be attained in less than
three (3) years. By and large, however, whether or not one has indeed attained permanent status
in one’s employment, before the passage of three (3) years, is a matter of proof.
Over the years, even with the enactment of a new Labor Code and the revision of the Manual, the
rule has not changed.
Thus, for academic personnel in private elementary and secondary schools, it is only after one
has satisfactorily completed the probationary period of three (3) school years and is rehired that
he acquires full tenure as a regular or permanent employee. In this regard, Section 93 of the
Manual pertinently provides:
Sec. 93. Regular or Permanent Status. - Those who have served the probationary period shall be
made regular or permanent. Full-time teachers who have satisfactorily completed their
probationary period shall be considered regular or permanent.
Accordingly, as held in Escudero, no vested right to a permanent appointment shall accrue until
the employee has completed the prerequisite three-year period necessary for the acquisition of a
permanent status. Of course, the mere rendition of service for three consecutive years does not
automatically ripen into a permanent appointment. It is also necessary that the employee be a
full-time teacher, and that the services he rendered are satisfactory.23
The common practice is for the employer and the teacher to enter into a contract, effective for
one school year. At the end of the school year, the employer has the option not to renew the
contract, particularly considering the teacher’s performance. If the contract is not renewed, the
employment relationship terminates. If the contract is renewed, usually for another school year,
the probationary employment continues. Again, at the end of that period, the parties may opt to
renew or not to renew the contract. If renewed, this second renewal of the contract for another
school year would then be the last year – since it would be the third school year – of
probationary employment. At the end of this third year, the employer may now decide whether to
extend a permanent appointment to the employee, primarily on the basis of the employee having
met the reasonable standards of competence and efficiency set by the employer. For the entire
duration of this three-year period, the teacher remains under probation. Upon the expiration of
his contract of employment, being simply on probation, he cannot automatically claim security
of tenure and compel the employer to renew his employment contract.24 It is when the yearly
contract is renewed for the third time that Section 93 of the Manual becomes operative, and the
teacher then is entitled to regular or permanent employment status.
It is important that the contract of probationary employment specify the period or term of its
effectivity. The failure to stipulate its precise duration could lead to the inference that the
contract is binding for the full three-year probationary period.25
196
All this does not mean that academic personnel cannot acquire permanent employment status
earlier than after the lapse of three years. The period of probation may be reduced if the
employer, convinced of the fitness and efficiency of a probationary employee, voluntarily
extends a permanent appointment even before the three-year period ends. Conversely, if the
purpose sought by the employer is neither attained nor attainable within the said period, the law
does not preclude the employer from terminating the probationary employment on justifiable
ground;26 or, a shorter probationary period may be incorporated in a collective bargaining
agreement.27 But absent any circumstances which unmistakably show that an abbreviated
probationary period has been agreed upon, the three-year probationary term governs.
Be that as it may, teachers on probationary employment enjoy security of tenure. In Biboso v.
Victorias Milling Co., Inc.,28 we made the following pronouncement:
This is, by no means, to assert that the security of tenure protection of the Constitution does not
apply to probationary employees. x x x During such period, they could remain in their positions
and any circumvention of their rights, in accordance with the statutory scheme, is subject to
inquiry and thereafter correction by the Department of Labor.
The ruling in Biboso simply signifies that probationary employees enjoy security of tenure
during the term of their probationary employment. As such, they cannot be removed except for
cause as provided by law, or if at the end of every yearly contract during the three-year period,
the employee does not meet the reasonable standards set by the employer at the time of
engagement. But this guarantee of security of tenure applies only during the period of probation.
Once that period expires, the constitutional protection can no longer be invoked.29
All these principles notwithstanding, we do not discount the validity of fixed-term employment
where –
the fixed period of employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear upon the employee and
absent any other circumstances vitiating his consent, or where it satisfactorily appears that the
employer and employee dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former over the latter.30
It does not necessarily follow that where the duties of the employees consist of activities usually
necessary or desirable in the usual business of the employer, the parties are forbidden from
agreeing on a period of time for the performance of such activities.31 Thus, in St. Theresa’s
School of Novaliches Foundation v. NLRC,32 we held that a contractual stipulation providing for
a fixed term of nine (9) months, not being contrary to law, morals, good customs, public order
and public policy, is valid, binding and must be respected, as it is the contract of employment
that governs the relationship of the parties.
Now, to the issues in the case at bench.
There should be no question that the employment of the respondent, as teacher, in petitioner
school on April 18, 2002 is probationary in character, consistent with standard practice in private
schools. In light of our disquisition above, we cannot subscribe to the proposition that the
respondent has acquired regular or permanent tenure as teacher. She had rendered service as such
only from April 18, 2002 until March 31, 2003. She has not completed the requisite three-year
period of probationary employment, as provided in the Manual. She cannot, by right, claim
permanent status.lawphil.net
There should also be no doubt that respondent’s appointment as Acting Principal is merely
temporary, or one that is good until another appointment is made to take its place.33 An "acting"
appointment is essentially a temporary appointment, revocable at will. The undisturbed
unanimity of cases shows that one who holds a temporary appointment has no fixed tenure of
office; his employment can be terminated any time at the pleasure of the appointing power
without need to show that it is for cause.34 Further, in La Salette of Santiago v. NLRC,35 we
acknowledged the customary arrangement in private schools to rotate administrative positions,
e.g., Dean or Principal, among employees, without the employee so appointed attaining security
of tenure with respect to these positions.
We are also inclined to agree with the CA that the resignation of the respondent36 is not valid,
not only because there was no express acceptance thereof by the employer, but because there is a
cloud of doubt as to the voluntariness of respondent’s resignation.
Resignation is the voluntary act of an employee who finds himself in a situation where he
believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and
that he has no other choice but to dissociate himself from employment.37 Voluntary resignation is
made with the intention of relinquishing an office, accompanied by the act of abandonment.38 It
is the acceptance of an employee’s resignation that renders it operative.39
Furthermore, well-entrenched is the rule that resignation is inconsistent with the filing of a
complaint for illegal dismissal.40 To be valid, the resignation must be unconditional, with the
intent to operate as such; there must be a clear intention to relinquish the position.41 In this case,
respondent actively pursued her illegal dismissal case against petitioner, such that she cannot be
said to have voluntarily resigned from her job.
197
What is truly contentious is whether the probationary appointment of the respondent on April 18,
2002 was for a fixed period of one (1) year, or without a fixed term, inasmuch as the parties
presented different versions of the employment agreement. As articulated by the CA:
In plain language, We are confronted with two (2) copies of an agreement, one with a negative
period and one provided for a one (1) year period for its effectivity. Ironically, none among the
parties offered corroborative evidence as to which of the two (2) discrepancies is the correct one
that must be given effect. x x x.42
The CA resolved the impassé in this wise:
Under this circumstance, We can only apply Article 1702 of the Civil Code which provides that,
in case of doubt, all labor contracts shall be construed in favor of the laborer. Then, too, settled is
the rule that any ambiguity in a contract whose terms are susceptible of different interpretations
must be read against the party who drafted it. In the case at bar, the drafter of the contract is
herein petitioners and must, therefore, be read against their contention.43
We agree with the CA.
In this case, there truly existed a doubt as to which version of the employment agreement should
be given weight. In respondent’s copy, the period of effectivity of the agreement remained blank.
On the other hand, petitioner’s copy provided for a one-year period, surprisingly from April 1,
2002 to March 31, 2003, even though the pleadings submitted by both parties indicated that
respondent was hired on April 18, 2002. What is noticeable even more is that the handwriting
indicating the one-year period in petitioner’s copy is different from the handwriting that filled up
the other needed information in the same agreement.44
Thus, following Article 1702 of the Civil Code that all doubts regarding labor contracts should
be construed in favor of labor, then it should be respondent’s copy which did not provide for an
express period which should be upheld, especially when there are circumstances that render the
version of petitioner suspect. This is in line with the State policy of affording protection to labor,
such that the lowly laborer, who is usually at the mercy of the employer, must look up to the law
to place him on equal footing with his employer.45
In addition, the employment agreement may be likened into a contract of adhesion considering
that it is petitioner who insists that there existed an express period of one year from April 1, 2002
to March 31, 2003, using as proof its own copy of the agreement. While contracts of adhesion
are valid and binding, in cases of doubt which will cause a great imbalance of rights against one
of the parties, the contract shall be construed against the party who drafted the same. Hence, in
this case, where the very employment of respondent is at stake, the doubt as to the period of
employment must be construed in her favor.
The other issue to resolve is whether respondent, even as a probationary employee, was illegally
dismissed. We rule in the affirmative.
As above discussed, probationary employees enjoy security of tenure during the term of their
probationary employment such that they may only be terminated for cause as provided for by
law, or if at the end of the probationary period, the employee failed to meet the reasonable
standards set by the employer at the time of the employee’s engagement. Undeniably, respondent
was hired as a probationary teacher and, as such, it was incumbent upon petitioner to show by
competent evidence that she did not meet the standards set by the school. This requirement,
petitioner failed to discharge. To note, the termination of respondent was effected by that letter
stating that she was being relieved from employment because the school authorities allegedly
decided, as a cost-cutting measure, that the position of "Principal" was to be abolished. Nowhere
in that letter was respondent informed that her performance as a school teacher was less than
satisfactory.
Thus, in light of our ruling of Espiritu Santo Parochial School v. NLRC46 that, in the absence of
an express period of probation for private school teachers, the three-year probationary period
provided by the Manual of Regulations for Private Schools must apply likewise to the case of
respondent. In other words, absent any concrete and competent proof that her performance as a
teacher was unsatisfactory from her hiring on April 18, 2002 up to March 31, 2003, respondent is
entitled to continue her three-year period of probationary period, such that from March 31, 2003,
her probationary employment is deemed renewed for the following two school years.47
Finally, we rule on the propriety of the monetary awards. Petitioner, as employer, is entitled to
decide whether to extend respondent a permanent status by renewing her contract beyond the
three-year period. Given the acrimony between the parties which must have been generated by
this controversy, it can be said unequivocally that petitioner had opted not to extend respondent’s
employment beyond this period. Therefore, the award of backwages as a consequence of the
finding of illegal dismissal in favor of respondent should be confined to the three-year
probationary period. Computing her monthly salary of ₱15,000.00 for the next two school years
(₱15,000.00 x 10 months x 2), respondent already having received her full salaries for the year
2002-2003, she is entitled to a total amount of ₱300,000.00.48 Moreover, respondent is also
entitled to receive her 13th month pay correspondent to the said two school years, computed as
yearly salary, divided by 12 months in a year, multiplied by 2, corresponding to the school years
2003-2004 and 2004-2005, or ₱150,000.00 / 12 months x 2 = ₱25,000.00. Thus, the NLRC was
correct in awarding respondent the amount of ₱325,000.00 as backwages, inclusive of 13th
198
month pay for the school years 2003-2004 and 2004-2005, and the amount of ₱3,750.00 as pro-
rated 13th month pay.
WHEREFORE, the petition is DENIED. The assailed Decision dated January 31, 2007 and the
Resolution dated June 29, 2007 of the Court of Appeals are AFFIRMED.
SO ORDERED.
G.R. No. 175170 September 5, 2012
MISAMIS ORIENTAL II ELECTRIC SERVICE COOPERATIVE (MORESCO II), Petitioner,
vs.
VIRGILIO M. CAGALAWAN, Respondent.
DECISION
DEL CASTILLO, J.:
In labor cases, strict adherence with the technical rules is not required.1 This literal policy,
however, should still conform with the rudiments of equitable principles of law. For instance,
belated submission of evidence may only be allowed if the delay is adequately justified and
the evidence is clearly material to establish the party's cause.2
By this Petition for Review on Certiorari,3 petitioner Misamis Oriental II Electric Service
Cooperative (MORESCO II) assails the Decision4 dated July 26, 2005 of the Court of Appeals
(CA) in CA-G.R. SP No. 84991, which reversed and set aside the Resolutions dated February
27, 20045 and April 26, 20046 of the National Labor Relations Commission (NLRC), and
thereby reinstated the Labor Arbiter’s Decision7 dated September 30, 2003 pronouncing
respondent Virgilio M. Cagalawan (Cagalawan) to have been constructively dismissed from
employment. Also assailed is the CA Resolution8 dated September 6, 2006 which denied
MORESCO II’s Motion for Reconsideration and granted Cagalawan’s Partial Motion for
Reconsideration.
Factual Antecedents
On September 1, 1993, MORESCO II, a rural electric cooperative, hired Cagalawan as a
Disconnection Lineman on a probationary basis. On March 1, 1994 Cagalawan was appointed
to the same post this time on a permanent basis.9 On July 17, 2001, he was designated as
Acting Head of the disconnection crew in Area III sub-office of MORESCO II in Balingasag,
Misamis Oriental (Balingasag sub-office).10 In a Memorandum11 dated May 9, 2002,
MORESCO II General Manager Amado B. Ke-e (Ke-e) transferred Cagalawan to Area I sub-
office in Gingoog City, Misamis Oriental (Gingoog sub-office) as a member of the
disconnection crew. Said memorandum stated that the transfer was done "in the exigency of
the service."
In a letter12 dated May 15, 2002, Cagalawan assailed his transfer claiming he was effectively
demoted from his position as head of the disconnection crew to a mere member thereof. He
also averred that his transfer to the Gingoog sub-office is inconvenient and prejudicial to him
as it would entail additional travel expenses to and from work. He likewise sought clarification
on what kind of exigency exists as to justify his transfer and why he was the one chosen to
be transferred.
In a Memorandum13 dated May 16, 2002, Ke-e explained that Cagalawan’s transfer was not
a demotion since he was holding the position of Disconnection Head only by mere designation
and not by appointment. Ke-e did not, however, state the basis of the transfer but instead
advised Cagalawan to just comply with the order and not to question management’s legitimate
prerogative to reassign him.
In reply, Cagalawan claimed that he was transferred because he executed an Affidavit14 in
support of his co-employee Jessie Rances, who filed an illegal dismissal case against
MORESCO II.15 He emphasized though that his action was not an act of disloyalty to
MORESCO II, contrary to what was being accused of him. Nonetheless, Cagalawan still
reported for work at Gingoog sub-office on May 27, 2002 but reserved his right to contest the
legality of such transfer.16
Meanwhile and in view of Cagalawan’s transfer, Ke-e issued an order17 recalling the former’s
previous designation as Acting Head of the disconnection crew of the Balingasag sub-office.
Cagalawan eventually stopped reporting for work. On July 1, 2002, he filed a Complaint for
constructive dismissal before the Arbitration branch of the NLRC against MORESCO II and its
officers, Ke-e and Danilo Subrado (Subrado), in their capacities as General Manager and Board
Chairman, respectively.
Proceedings before the Labor Arbiter
When the Labor Arbiter, in an Order18 dated September 13, 2002, directed the parties to
submit their respective verified position papers, only Cagalawan complied.19 He alleged that
his transfer was unnecessary and was made only in retaliation for his having executed an
affidavit in favor of a co-worker and against MORESCO II. In support of his contention,
Cagalawan submitted a certification20 executed by the Head of the disconnection crew of the
Gingoog sub-office, Teodoro Ortiz (Ortiz), attesting that the said sub-office was not
undermanned. In fact, when Cagalawan stopped working, no other employee was transferred
or hired in his stead, a proof that there were enough disconnection crew members in Gingoog
sub-office who can very well handle the assigned tasks. Moreover, Cagalawan claimed that
his transfer constituted a demotion from his position as Acting Head of the disconnection crew
199
which he had occupied for almost 10 months. As such, he should be considered regular in WHEREFORE, premises considered, judgment is rendered declaring the transfer of
that position and entitled to its corresponding salary. complainant as tantamount to constructive dismissal and ordering respondents to reinstate
complainant to his position as collector in Balingasag, Misamis Oriental without loss of
Cagalawan further alleged that his transfer from Balingasag to Gingoog sub-office was seniority rights and to pay complainant the following:
tantamount to illegal constructive dismissal for being prejudicial and inconvenient as he had
to spend an additional amount of ₱ 197.0021 a day, leaving him nothing of his salary. He 1. Backwages - ₱ 189,096.00
therefore had no choice but to stop working.
2. Exemplary damages - P 10,000.00
3. Moral damages - P 20,000.00
Aside from reinstatement and backwages, Cagalawan sought to recover damages and
attorney’s fees because to him, his transfer was effected in a wanton, fraudulent, oppressive 4. Attorney's fee 10% - P 21,909.60
or malevolent manner. Apart from MORESCO II, he averred that Ke-e and Subrado should GRAND TOTAL AWARD ₱ 241,005.60
also be held personally liable for damages since the two were guilty of bad faith in effecting
his transfer. He believed that Subrado had a hand in his arbitrary transfer considering that he SO ORDERED.26
is the son-in-law of Subrado’s opponent in the recent election for directorship in the electric
cooperative. In fact, Subrado even asked a certain Cleopatra Moreno Manuel to file a baseless
Proceedings before the National Labor Relations Commission
complaint against him as borne out by the declaration of Bob Abao in an affidavit.22

MORESCO II and Cagalawan both appealed the Labor Arbiter’s Decision.

In view of MORESCO II’s failure to file a position paper, Cagalawan filed a Motion23 for the
issuance of an order to declare the case submitted for decision. This was granted in an
Order24 dated March 14, 2003. In its Memorandum on Appeal,27 MORESCO II invoked the liberal application of the rules and
prayed for the NLRC to admit its evidence on appeal. MORESCO II denied that Cagalawan’s
transfer was done in retaliation for executing an affidavit in favor of a co-worker. MORESCO
On September 30, 2003, the Labor Arbiter rendered a Decision25 declaring that Cagalawan’s
II explained that the transfer was in response to the request of the area manager in Gingoog
transfer constituted illegal constructive dismissal. Aside from finding merit in Cagalawan’s
sub-office for additional personnel in his assigned area. To substantiate this, it submitted a
uncontroverted allegation that the transfer became grossly inconvenient for him, the Labor
letter28 dated May 8, 2002 from Gingoog sub-office Area Manager, Engr. Ronel B. Canada
Arbiter found no sufficient reason for his transfer and that the same was calculated to rid him
(Engr. Canada), addressed to Ke-e. In said letter, Engr. Canada requested for two additional
of his employment, impelled by a vindictive motive after he executed an Affidavit in favor of
disconnection linemen in order to attain the collection quota allocated in his area. MORESCO
a colleague and against MORESCO II.
II then averred that as against this letter of Engr. Canada who is a managerial employee, the
certification issued by Ortiz should be considered as incompetent since the latter is a mere
Thus, the Labor Arbiter ordered Cagalawan’s reinstatement to the position of Collector and disconnection crew.
awarded him backwages from the date of his transfer on May 16, 2002 up to his actual
reinstatement. However, the Labor Arbiter denied his prayer for regularization as head of the
Moreover, Cagalawan’s claim of additional expenses brought about by his transfer, specifically
disconnection crew since the period of six months which he claimed as sufficient to acquire
for meal and transportation, deserves no appreciation at all since he would still incur these
regular status applies only to probationary employment. Hence, the fact that he was acting
expenses regardless of his place of assignment and also considering that he was provided
as head of the disconnection crew for 10 months did not entitle him to such position on a
with a rented motorcycle with fuel and oil allowance.
permanent basis. Moreover, the decision to promote him to the said position should only come
from the management.
Also, MORESCO II intimated that it has no intention of removing Cagalawan from its employ
especially since his father-in-law was its previous Board Member. In fact, it was Cagalawan
With respect to damages, the Labor Arbiter found Ke-e to have acted capriciously in effecting
himself who committed an act of insubordination when he abandoned his job.
the transfer, hence, he awarded moral and exemplary damages to Cagalawan. Attorney’s fees
was likewise adjudged in his favor.
In his Reply29 to MORESCO II’s Memorandum of Appeal, Cagalawan averred that the latter
cannot present any evidence for the first time on appeal without giving any valid reason for
The dispositive portion of the Decision reads:
its failure to submit its evidence before the Labor Arbiter as provided under the NLRC rules.
Further, the evidence sought to be presented by MORESCO II is not newly discovered evidence

200
as to warrant its admission on appeal. In particular, he claimed that the May 8, 2002 letter
of Engr. Canada should have been submitted at the earliest opportunity, that is, before the
Labor Arbiter. MORESCO II’s failure to present the same at such time thus raises suspicion
that the document was merely fabricated for the purpose of appeal. Moreover, Cagalawan
claimed that if there was indeed a request from the Area Manager of Gingoog sub-office for
additional personnel as required by the exigency of the service, such reason should have been
mentioned in Ke-e’s May 16, 2002 Memorandum. In this way, the transfer would appear to
have a reasonable basis at the outset. However, no such mention was made precisely because
the transfer was without any valid reason.
Anent Cagalawan’s partial appeal,30 he prayed that the decision be modified in that he should
be reinstated as Disconnection Lineman and not as Collector.
The NLRC, through a Resolution31 dated February 27, 2004, set aside and vacated the
Decision of the Labor Arbiter and dismissed Cagalawan’s complaint against MORESCO II. The
NLRC admitted MORESCO II’s evidence even if submitted only on appeal in the interest of
substantial justice. It then found said evidence credible in showing that Cagalawan’s transfer
to Gingoog sub-office was required in the exigency of the cooperative’s business interest. It
also ruled that the transfer did not entail a demotion in rank and diminution of pay as to
constitute constructive dismissal and thus upheld the right of MORESCO II to transfer
Cagalawan in the exercise of its sound business judgment.
Cagalawan filed a Motion for Reconsideration32 but the same was denied by the NLRC in a
Resolution33 dated April 26, 2004.
Proceedings before the Court of Appeals
Cagalawan thus filed a Petition for Certiorari34 with the CA. In a Decision35 dated July 26,
2005, the CA found the NLRC to have gravely abused its discretion in admitting MORESCO
II’s evidence, citing Section 3, Rule V of the NLRC Rules of Procedure36 which prohibits the
parties from making new allegations or cause of action not included in the complaint or
position paper, affidavits and other documents. It held that what MORESCO II presented on
appeal was not just an additional evidence but its entire evidence after the Labor Arbiter
rendered a Decision adverse to it. To the CA, MORESCO II’s belated submission of evidence
despite the opportunities given it cannot be countenanced as such practice "defeats speedy
administration of justice" and "smacks of unfairness."
The dispositive portion of the CA Decision reads:
IN VIEW THEREOF, the petition is GRANTED. The Decision of the Labor Arbiter is reinstated
with the modification that if reinstatement of petitioner is not feasible, he should be paid
separation pay in accordance with law.
SO ORDERED.37
MORESCO II filed a Motion for Reconsideration38 insisting that it may present evidence for
the first time on appeal as the NLRC is not precluded from admitting the same because
technical rules are not binding in labor cases. Besides, of paramount importance is the
opportunity of the other party to rebut or comment on the appeal, which in this case, was
afforded to Cagalawan.
Cagalawan, for his part, filed a Partial Motion for Reconsideration,39 seeking modification of
the Decision by ordering his reinstatement to the position of Disconnection Lineman instead
of Collector.
In a Resolution40 dated September 6, 2006, the CA maintained its ruling that MORESCO II’s
unexplained failure to present evidence or submit a position paper before the Labor Arbiter
for almost 12 months from receipt of Cagalawan’s position paper is intolerable and cannot be
permitted. Hence, it denied its Motion for Reconsideration. With respect to Cagalawan’s
motion, the same was granted by the CA, viz:
Anent petitioner’s Partial Motion for Reconsideration, We find the same meritorious. The
records of this case reveal that prior to his constructive dismissal, petitioner was a
Disconnection Lineman, not a Collector, assigned at Balingasag, Misamis Oriental. Hence, We
modify the dispositive portion of Our July 26, 2005 Decision, to read:
‘IN VIEW THEREOF, the petition is GRANTED. The Decision of the Labor Arbiter is reinstated
with modification that petitioner be reinstated to his position as Disconnection Lineman in
Balingasag, Misamis Oriental with further modification that if reinstatement of petitioner is
not feasible, he should be paid separation pay in accordance with law.’ 41 (Emphasis in the
original.)
Issues
MORESCO II thus filed this petition raising the following issues:
(1) Was the respondent constructively dismissed by the petitioner?
(2) Did the Court of Appeals err in reversing the NLRC?42
MORESCO II insists that Cagalawan’s transfer was necessary in order to attain the collection
quota of the Gingoog sub-office. It contests the credibility of Ortiz’s certification which stated
that there was no need for additional personnel in the Gingoog sub-office. According to it,
Ortiz is not a managerial employee but merely a disconnection crew who is not competent to
make declarations in relation to MORESCO II’s business needs. It likewise refutes Cagalawan’s
claim of incurring additional expenses due to his transfer which caused him inconvenience. In
sum, it claims that Cagalawan was not constructively dismissed but instead had voluntarily
abandoned his job.
201
MORESCO II avers that the CA’s ruling is not in accordance with jurisprudence on the matter pursuit of its legitimate interests. But this prerogative should be exercised without grave
of admitting evidence on appeal in labor cases. It submits that the NLRC is correct in accepting abuse of discretion and with due regard to the basic elements of justice and fair play, such
its evidence submitted for the first time on appeal in line with the basic precepts of equity that if there is a showing that the transfer was unnecessary or inconvenient and prejudicial
and fairness. The NLRC also correctly ruled in its favor after properly appreciating its evidence to the employee, it cannot be upheld.46
which had been rebutted and contradicted by Cagalawan.
Here, while we find that the transfer of Cagalawan neither entails any demotion in rank since
Our Ruling he did not have tenurial security over the position of head of the disconnection crew, nor
result to diminution in pay as this was not sufficiently proven by him, MORESCO II’s evidence
The petition has no merit. is nevertheless not enough to show that said transfer was required by the exigency of the
electric cooperative’s business interest. Simply stated, the evidence sought to be admitted by
MORESCO II’s belated submission of MORESCO II is not substantial to prove that there was a genuine business urgency that
evidence cannot be permitted. necessitated the transfer.

Labor tribunals, such as the NLRC, are not precluded from receiving evidence submitted on Notably, the only evidence adduced by MORESCO II to support the legitimacy of the transfer
appeal as technical rules are not binding in cases submitted before them.43 However, any was the letter-request of Engr. Canada. However, this piece of evidence cannot in itself
delay in the submission of evidence should be adequately explained and should adequately sufficiently establish that the Gingoog sub-office was indeed suffering from losses due to
prove the allegations sought to be proven.44 collection deficiency so as to justify the assignment of additional personnel in the area. Engr.
Canada’s letter is nothing more than a mere request for additional personnel to augment the
number of disconnection crew assigned in the area. While it mentioned that the area’s
In the present case, MORESCO II did not cite any reason why it had failed to file its position
collection efficiency should be improved and that there is a shortage of personnel therein, it
paper or present its cause before the Labor Arbiter despite sufficient notice and time given to
is, standing alone, self-serving and thus cannot be considered as competent evidence to prove
do so. Only after an adverse decision was rendered did it present its defense and rebut the
the accuracy of the allegations therein. MORESCO II could have at least presented financial
evidence of Cagalawan by alleging that his transfer was made in response to the letter-request
documents or any other concrete documentary evidence showing that the collection quota of
of the area manager of the Gingoog sub-office asking for additional personnel to meet its
the Gingoog sub-office has not been met or could not be reached. It should have also
collection quota. To our mind, however, the belated submission of the said letter-request
submitted such other documents which would show the lack of sufficient personnel in the
without any valid explanation casts doubt on its credibility, specially so when the same is not
area. Unfortunately, the area manager’s letter provides no more than bare allegations which
a newly discovered evidence. For one, the letter-request was dated May 8, 2002 or a day
deserve not even the slightest credit.
before the memorandum for Cagalawan’s transfer was issued. MORESCO II could have easily
presented the letter in the proceedings before the Labor Arbiter for serious examination. Why
it was not presented at the earliest opportunity is a serious question which lends credence to When there is doubt between the evidence submitted by the employer and that submitted by
Cagalawan’s theory that it may have just been fabricated for the purpose of appeal. the employee, the scales of justice must be tilted in favor of the employee.47 This is consistent
with the rule that an employer’s cause could only succeed on the strength of its own evidence
and not on the weakness of the employee’s evidence.48 Thus, MORESCO II cannot rely on
It should also be recalled that after Cagalawan received the memorandum for his transfer to
the weakness of Ortiz’s certification in order to give more credit to its own evidence. Self-
the Gingoog sub-office, he immediately questioned the basis thereof through a letter
serving and unsubstantiated declarations are not sufficient where the quantum of evidence
addressed to Ke-e. If at that time there was already a letter-request from the Gingoog area
required to establish a fact is substantial evidence, described as more than a mere scintilla.49
manager, Ke-e could have easily referred to or specified this in his subsequent memorandum
"The evidence must be real and substantial, and not merely apparent."50 MORESCO II has
of May 16, 2002 which served as his response to Cagalawan’s queries about the transfer.
miserably failed to discharge the onus of proving the validity of Cagalawan’s transfer.
However, the said memorandum was silent in this respect. Nevertheless, Cagalawan, for his
part, faithfully complied with the transfer order but with the reservation to contest its validity
precisely because he was not adequately informed of its real basis. Clearly, not only was the delay in the submission of MORESCO II’s evidence not explained,
there was also failure on its part to sufficiently support its allegation that the transfer of
Cagalawan was for a legitimate purpose. This being the case, MORESCO II’s plea that its
The rule is that it is within the ambit of the employer’s prerogative to transfer an employee
evidence be admitted in the interest of justice does not deserve any merit.
for valid reasons and according to the requirement of its business, provided that the transfer
does not result in demotion in rank or diminution of salary, benefits and other privileges.45
This Court has always considered the management’s prerogative to transfer its employees in
202
Ke-e and Subrado, as corporate officers, ORTIGUERRA and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA),
could not be held personally liable for respondents.
Cagalawan’s monetary awards.
Solon Garcia for petitioner.
In the Decision of the Labor Arbiter, the manager of MORESCO II was held to have acted in
an arbitrary manner in effecting Cagalawan’s transfer such that moral and exemplary Adolpho M. Guerzon for respondent PALEA.
damages were awarded in the latter’s favor. However, the said Decision did not touch on the
issue of bad faith on the part of MORESCO II’s officers, namely, Ke-e and Subrado.
Consequently, no pronouncement was made as to whether the two are also personally liable
for Cagalawan’s money claims arising from his constructive dismissal.
MELO, J.:

Still, we hold that Ke-e and Subrado cannot be held personally liable for Cagalawan’s money
In the instant petition for certiorari, the Court is presented the issue of whether or not the
claims.
formulation of a Code of Discipline among employees is a shared responsibility of the employer
and the employees.
"Bad faith does not simply connote bad judgment or negligence; it imputes a dishonest
purpose or some moral obliquity and conscious doing of a wrong; a breach of sworn duty
On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of
through some motive or intent or ill will; it partakes of the nature of fraud."51 Here, although
Discipline. The Code was circulated among the employees and was immediately implemented,
we agree with the Labor Arbiter that Ke-e acted in an arbitrary manner in effecting
and some employees were forthwith subjected to the disciplinary measures embodied therein.
Cagalawan’s transfer, the same, absent any showing of some dishonest or wrongful purpose,
does not amount to bad faith.
Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a
complaint before the National Labor Relations Commission (NLRC) for unfair labor practice
Suffice it to say that bad faith must be established clearly and convincingly as the same is
(Case No. NCR-7-2051-85) with the following remarks: "ULP with arbitrary implementation
never presumed.52 Similarly, no bad faith can be presumed from the fact that Subrado was
of PAL's Code of Discipline without notice and prior discussion with Union by Management"
the opponent of Cagalawan’s father-in-law in the election for directorship in the cooperative.
(Rollo, p. 41). In its position paper, PALEA contended that PAL, by its unilateral
Cagalawan's claim that this was one of the reasons why he was transferred is a mere
implementation of the Code, was guilty of unfair labor practice, specifically Paragraphs E and
allegation without proof. Neither does Subrado 's alleged instruction to file a complaint against
G of Article 249 and Article 253 of the Labor Code. PALEA alleged that copies of the Code had
Cagalawan bolster the Iatter's claim that the former had malicious intention against him. As
been circulated in limited numbers; that being penal in nature the Code must conform with
the Chairman of the Board of Directors of MORESCO II, Subrado has the duty and obligation
the requirements of sufficient publication, and that the Code was arbitrary, oppressive, and
to act upon complaints of its clients. On the contrary, the Court finds that Subrado had no
prejudicial to the rights of the employees. It prayed that implementation of the Code be held
participation whatsoever in Cagalawan's illegal dismissal; hence. the imputation of bad faith
in abeyance; that PAL should discuss the substance of the Code with PALEA; that employees
against him is untenable.
dismissed under the Code be reinstated and their cases subjected to further hearing; and that
PAL be declared guilty of unfair labor practice and be ordered to pay damages (pp. 7-14,
WHEREFORE, the petition is DENIED. The Decision dated July 26, 2005 or the Court of Record.)
Appeals in CA-G.R. SP No. 84991 and its Resolution dated September 6, 2006, are
AFFIRMED.
PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to
prescibe rules and regulations regarding employess' conduct in carrying out their duties and
SO ORDERED. functions, and alleging that by implementing the Code, it had not violated the collective
bargaining agreement (CBA) or any provision of the Labor Code. Assailing the complaint as
G.R. No. 85985 August 13, 1993 unsupported by evidence, PAL maintained that Article 253 of the Labor Code cited by PALEA
reffered to the requirements for negotiating a CBA which was inapplicable as indeed the
PHILIPPINE AIRLINES, INC. (PAL), petitioner, current CBA had been negotiated.
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ISABEL P. In its reply to PAL's position paper, PALEA maintained that Article 249 (E) of the Labor Code
was violated when PAL unilaterally implemented the Code, and cited provisions of Articles IV
203
and I of Chapter II of the Code as defective for, respectively, running counter to the
construction of penal laws and making punishable any offense within PAL's contemplation.
These provisions are the following:
Sec. 2. Non-exclusivity. — This Code does not contain the entirety of the rules and regulations
of the company. Every employee is bound to comply with all applicable rules, regulations,
policies, procedures and standards, including standards of quality, productivity and behaviour,
as issued and promulgated by the company through its duly authorized officials. Any violations
thereof shall be punishable with a penalty to be determined by the gravity and/or frequency
of the offense.
Sec. 7. Cumulative Record. — An employee's record of offenses shall be cumulative. The
penalty for an offense shall be determined on the basis of his past record of offenses of any
nature or the absence thereof. The more habitual an offender has been, the greater shall be
the penalty for the latest offense. Thus, an employee may be dismissed if the number of his
past offenses warrants such penalty in the judgment of management even if each offense
considered separately may not warrant dismissal. Habitual offenders or recidivists have no
place in PAL. On the other hand, due regard shall be given to the length of time between
commission of individual offenses to determine whether the employee's conduct may indicate
occasional lapses (which may nevertheless require sterner disciplinary action) or a pattern of
incorrigibility.
Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a conference but
they failed to appear at the scheduled date. Interpreting such failure as a waiver of the parties'
right to present evidence, the labor arbiter considered the case submitted for decision. On
November 7, 1986, a decision was rendered finding no bad faith on the part of PAL in adopting
the Code and ruling that no unfair labor practice had been committed. However, the arbiter
held that PAL was "not totally fault free" considering that while the issuance of rules and
regulations governing the conduct of employees is a "legitimate management prerogative"
such rules and regulations must meet the test of "reasonableness, propriety and fairness."
She found Section 1 of the Code aforequoted as "an all embracing and all encompassing
provision that makes punishable any offense one can think of in the company"; while Section
7, likewise quoted above, is "objectionable for it violates the rule against double jeopardy
thereby ushering in two or more punishment for the same misdemeanor." (pp. 38-39, Rollo.)
The labor arbiter also found that PAL "failed to prove that the new Code was amply circulated."
Noting that PAL's assertion that it had furnished all its employees copies of the Code is
unsupported by documentary evidence, she stated that such "failure" on the part of PAL
resulted in the imposition of penalties on employees who thought all the while that the 1966
Code was still being followed. Thus, the arbiter concluded that "(t)he phrase ignorance of the
law excuses no one from compliance . . . finds application only after it has been conclusively
shown that the law was circulated to all the parties concerned and efforts to disseminate
information regarding the new law have been exerted. (p. 39, Rollo.) She thereupon disposed:
WHEREFORE, premises considered, respondent PAL is hereby ordered as follows:
1. Furnish all employees with the new Code of Discipline;
2. Reconsider the cases of employees meted with penalties under the New Code of Discipline
and remand the same for further hearing; and
3. Discuss with PALEA the objectionable provisions specifically tackled in the body of the
decision.
All other claims of the complainant union (is) [are] hereby, dismissed for lack of merit.
SO ORDERED. (p. 40, Rollo.)
PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner Encarnacion,
with Presiding Commissioner Bonto-Perez and Commissioner Maglaya concurring, found no
evidence of unfair labor practice committed by PAL and affirmed the dismissal of PALEA's
charge. Nonetheless, the NLRC made the following observations:
Indeed, failure of management to discuss the provisions of a contemplated code of discipline
which shall govern the conduct of its employees would result in the erosion and deterioration
of an otherwise harmonious and smooth relationship between them as did happen in the
instant case. There is no dispute that adoption of rules of conduct or discipline is a prerogative
of management and is imperative and essential if an industry, has to survive in a competitive
world. But labor climate has progressed, too. In the Philippine scene, at no time in our
contemporary history is the need for a cooperative, supportive and smooth relationship
between labor and management more keenly felt if we are to survive economically.
Management can no longer exclude labor in the deliberation and adoption of rules and
regulations that will affect them.
The complainant union in this case has the right to feel isolated in the adoption of the New
Code of Discipline. The Code of Discipline involves security of tenure and loss of employment
— a property right! It is time that management realizes that to attain effectiveness in its
conduct rules, there should be candidness and openness by Management and participation by
the union, representing its members. In fact, our Constitution has recognized the principle of
"shared responsibility" between employers and workers and has likewise recognized the right
of workers to participate in "policy and decision-making process affecting their rights . . ."
The latter provision was interpreted by the Constitutional Commissioners to mean
participation in "management"' (Record of the Constitutional Commission, Vol. II).
In a sense, participation by the union in the adoption of the code if conduct could have
accelerated and enhanced their feelings of belonging and would have resulted in cooperation
rather than resistance to the Code. In fact, labor-management cooperation is now "the thing."
(pp. 3-4, NLRC Decision ff. p. 149, Original Record.)
204
Respondent Commission thereupon disposed:
WHEREFORE, premises considered, we modify the appealed decision in the sense that the
New Code of Discipline should be reviewed and discussed with complainant union, particularly
the disputed provisions [.] (T)hereafter, respondent is directed to furnish each employee with
a copy of the appealed Code of Discipline. The pending cases adverted to in the appealed
decision if still in the arbitral level, should be reconsidered by the respondent Philippine Air
Lines. Other dispositions of the Labor Arbiter are sustained.
SO ORDERED. (p. 5, NLRC Decision.)
PAL then filed the instant petition for certiorari charging public respondents with grave abuse
of discretion in: (a) directing PAL "to share its management prerogative of formulating a Code
of Discipline"; (b) engaging in quasi-judicial legislation in ordering PAL to share said
prerogative with the union; (c) deciding beyond the issue of unfair labor practice, and (d)
requiring PAL to reconsider pending cases still in the arbitral level (p. 7, Petition; p. 8, Rollo.)
As stated above, the Principal issue submitted for resolution in the instant petition is whether
management may be compelled to share with the union or its employees its prerogative of
formulating a code of discipline.
PAL asserts that when it revised its Code on March 15, 1985, there was no law which
mandated the sharing of responsibility therefor between employer and employee.
Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending
Article 211 of the Labor Code, that the law explicitly considered it a State policy "(t)o ensure
the participation of workers in decision and policy-making processes affecting the rights,
duties and welfare." However, even in the absence of said clear provision of law, the exercise
of management prerogatives was never considered boundless. Thus, in Cruz vs. Medina (177
SCRA 565 [1989]) it was held that management's prerogatives must be without abuse of
discretion.
In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25 [1989]), we upheld
the company's right to implement a new system of distributing its products, but gave the
following caveat:
So long as a company's management prerogatives are exercised in good faith for the
advancement of the employer's interest and not for the purpose of defeating or circumventing
the rights of the employees under special laws or under valid agreements, this Court will
uphold them.
(at p. 28.)
All this points to the conclusion that the exercise of managerial prerogatives is not unlimited.
It is circumscribed by limitations found in law, a collective bargaining agreement, or the
general principles of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758
[1990]). Moreover, as enunciated in Abbott Laboratories (Phil.), vs. NLRC (154 713 [1987]),
it must be duly established that the prerogative being invoked is clearly a managerial one.
A close scrutiny of the objectionable provisions of the Code reveals that they are not purely
business-oriented nor do they concern the management aspect of the business of the
company as in the San Miguel case. The provisions of the Code clearly have repercusions on
the employee's right to security of tenure. The implementation of the provisions may result
in the deprivation of an employee's means of livelihood which, as correctly pointed out by the
NLRC, is a property right (Callanta, vs Carnation Philippines, Inc., 145 SCRA 268 [1986]). In
view of these aspects of the case which border on infringement of constitutional rights, we
must uphold the constitutional requirements for the protection of labor and the promotion of
social justice, for these factors, according to Justice Isagani Cruz, tilt "the scales of justice
when there is doubt, in favor of the worker" (Employees Association of the Philippine American
Life Insurance Company vs. NLRC, 199 SCRA 628 [1991] 635).
Verily, a line must be drawn between management prerogatives regarding business
operations per se and those which affect the rights of the employees. In treating the latter,
management should see to it that its employees are at least properly informed of its decisions
or modes action. PAL asserts that all its employees have been furnished copies of the Code.
Public respondents found to the contrary, which finding, to say the least is entitled to great
respect.
PAL posits the view that by signing the 1989-1991 collective bargaining agreement, on June
27, 1990, PALEA in effect, recognized PAL's "exclusive right to make and enforce company
rules and regulations to carry out the functions of management without having to discuss the
same with PALEA and much less, obtain the latter's conformity thereto" (pp. 11-12,
Petitioner's Memorandum; pp 180-181, Rollo.) Petitioner's view is based on the following
provision of the agreement:
The Association recognizes the right of the Company to determine matters of management it
policy and Company operations and to direct its manpower. Management of the Company
includes the right to organize, plan, direct and control operations, to hire, assign employees
to work, transfer employees from one department, to another, to promote, demote, discipline,
suspend or discharge employees for just cause; to lay-off employees for valid and legal
causes, to introduce new or improved methods or facilities or to change existing methods or
facilities and the right to make and enforce Company rules and regulations to carry out the
functions of management.
The exercise by management of its prerogative shall be done in a just reasonable, humane
and/or lawful manner.
Such provision in the collective bargaining agreement may not be interpreted as cession of
employees' rights to participate in the deliberation of matters which may affect their rights
205
and the formulation of policies relative thereto. And one such mater is the formulation of a
code of discipline.
Indeed, industrial peace cannot be achieved if the employees are denied their just
participation in the discussion of matters affecting their rights. Thus, even before Article 211
of the labor Code (P.D. 442) was amended by Republic Act No. 6715, it was already declared
a policy of the State, "(d) To promote the enlightenment of workers concerning their rights
and obligations . . . as employees." This was, of course, amplified by Republic Act No 6715
when it decreed the "participation of workers in decision and policy making processes affecting
their rights, duties and welfare." PAL's position that it cannot be saddled with the "obligation"
of sharing management prerogatives as during the formulation of the Code, Republic Act No.
6715 had not yet been enacted (Petitioner's Memorandum, p. 44; Rollo, p. 212), cannot thus
be sustained. While such "obligation" was not yet founded in law when the Code was
formulated, the attainment of a harmonious labor-management relationship and the then
already existing state policy of enlightening workers concerning their rights as employees
demand no less than the observance of transparency in managerial moves affecting
employees' rights.
Petitioner's assertion that it needed the implementation of a new Code of Discipline
considering the nature of its business cannot be overemphasized. In fact, its being a local
monopoly in the business demands the most stringent of measures to attain safe travel for
its patrons. Nonetheless, whatever disciplinary measures are adopted cannot be properly
implemented in the absence of full cooperation of the employees. Such cooperation cannot
be attained if the employees are restive on account, of their being left out in the determination
of cardinal and fundamental matters affecting their employment.
WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED. No special
pronouncement is made as to costs.
SO ORDERED.
G.R. No. 157010 June 21, 2005
PHILIPPINE NATIONAL BANK, petitioner,
vs.
FLORENCE O. CABANSAG, respondent.
DECISION
PANGANIBAN, J.:
The Court reiterates the basic policy that all Filipino workers, whether employed locally or
overseas, enjoy the protective mantle of Philippine labor and social legislations. Our labor
statutes may not be rendered ineffective by laws or judgments promulgated, or stipulations
agreed upon, in a foreign country.
The Case
Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, seeking
to reverse and set aside the July 16, 2002 Decision 2 and the January 29, 2003 Resolution3 of
the Court of Appeals (CA) in CA-GR SP No. 68403. The assailed Decision dismissed the CA
Petition (filed by herein petitioner), which had sought to reverse the National Labor Relations
Commission (NLRC)’s June 29, 2001 Resolution, 4 affirming Labor Arbiter Joel S. Lustria’s
January 18, 2000 Decision.5
The assailed CA Resolution denied herein petitioner’s Motion for Reconsideration.
The Facts
The facts are narrated by the Court of Appeals as follows:
"In late 1998, [herein Respondent Florence Cabansag] arrived in Singapore as a tourist. She
applied for employment, with the Singapore Branch of the Philippine National Bank, a private
banking corporation organized and existing under the laws of the Philippines, with principal
offices at the PNB Financial Center, Roxas Boulevard, Manila. At the time, the Singapore PNB
Branch was under the helm of Ruben C. Tobias, a lawyer, as General Manager, with the rank
of Vice-President of the Bank. At the time, too, the Branch Office had two (2) types of
employees: (a) expatriates or the regular employees, hired in Manila and assigned abroad
including Singapore, and (b) locally (direct) hired. She applied for employment as Branch
Credit Officer, at a total monthly package of $SG4,500.00, effective upon assumption of duties
after approval. Ruben C. Tobias found her eminently qualified and wrote on October 26, 1998,
a letter to the President of the Bank in Manila, recommending the appointment of Florence O.
Cabansag, for the position.
xxxxxxxxx
"The President of the Bank was impressed with the credentials of Florence O. Cabansag that
he approved the recommendation of Ruben C. Tobias. She then filed an ‘Application,’ with the
Ministry of Manpower of the Government of Singapore, for the issuance of an ‘Employment
Pass’ as an employee of the Singapore PNB Branch. Her application was approved for a period
of two (2) years.
"On December 7, 1998, Ruben C. Tobias wrote a letter to Florence O. Cabansag offering her
a temporary appointment, as Credit Officer, at a basic salary of Singapore Dollars 4,500.00,
a month and, upon her successful completion of her probation to be determined solely, by
the Bank, she may be extended at the discretion of the Bank, a permanent appointment and
that her temporary appointment was subject to the following terms and conditions:
206
‘1. You will be on probation for a period of three (3) consecutive months from the date of your
assumption of duty.
‘2. You will observe the Bank’s rules and regulations and those that may be adopted from
time to time.
‘3. You will keep in strictest confidence all matters related to transactions between the Bank
and its clients.
‘4. You will devote your full time during business hours in promoting the business and interest
of the Bank.
‘5. You will not, without prior written consent of the Bank, be employed in anyway for any
purpose whatsoever outside business hours by any person, firm or company.
‘6. Termination of your employment with the Bank may be made by either party after notice
of one (1) day in writing during probation, one month notice upon confirmation or the
equivalent of one (1) day’s or month’s salary in lieu of notice.’
"Florence O. Cabansag accepted the position and assumed office. In the meantime, the
Philippine Embassy in Singapore processed the employment contract of Florence O. Cabansag
and, on March 8, 1999, she was issued by the Philippine Overseas Employment
Administration, an ‘Overseas Employment Certificate,’ certifying that she was a bona fide
contract worker for Singapore.
xxxxxxxxx
"Barely three (3) months in office, Florence O. Cabansag submitted to Ruben C. Tobias, on
March 9, 1999, her initial ‘Performance Report.’ Ruben C. Tobias was so impressed with the
‘Report’ that he made a notation and, on said ‘Report’: ‘GOOD WORK.’ However, in the
evening of April 14, 1999, while Florence O. Cabansag was in the flat, which she and Cecilia
Aquino, the Assistant Vice-President and Deputy General Manager of the Branch and Rosanna
Sarmiento, the Chief Dealer of the said Branch, rented, she was told by the two (2) that
Ruben C. Tobias has asked them to tell Florence O. Cabansag to resign from her job. Florence
O. Cabansag was perplexed at the sudden turn of events and the runabout way Ruben C.
Tobias procured her resignation from the Bank. The next day, Florence O. Cabansag talked
to Ruben C. Tobias and inquired if what Cecilia Aquino and Rosanna Sarmiento had told her
was true. Ruben C. Tobias confirmed the veracity of the information, with the explanation
that her resignation was imperative as a ‘cost-cutting measure’ of the Bank. Ruben C. Tobias,
likewise, told Florence O. Cabansag that the PNB Singapore Branch will be sold or transformed
into a remittance office and that, in either way, Florence O. Cabansag had to resign from her
employment. The more Florence O. Cabansag was perplexed. She then asked Ruben C. Tobias
that she be furnished with a ‘Formal Advice’ from the PNB Head Office in Manila. However,
Ruben C. Tobias flatly refused. Florence O. Cabansag did not submit any letter of resignation.
"On April 16, 1999, Ruben C. Tobias again summoned Florence O. Cabansag to his office and
demanded that she submit her letter of resignation, with the pretext that he needed a
Chinese-speaking Credit Officer to penetrate the local market, with the information that a
Chinese-speaking Credit Officer had already been hired and will be reporting for work soon.
She was warned that, unless she submitted her letter of resignation, her employment record
will be blemished with the notation ‘DISMISSED’ spread thereon. Without giving any definitive
answer, Florence O. Cabansag asked Ruben C. Tobias that she be given sufficient time to look
for another job. Ruben C. Tobias told her that she should be ‘out’ of her employment by May
15, 1999.
"However, on April 19, 1999, Ruben C. Tobias again summoned Florence O. Cabansag and
adamantly ordered her to submit her letter of resignation. She refused. On April 20, 1999,
she received a letter from Ruben C. Tobias terminating her employment with the Bank.
xxxxxxxxx
"On January 18, 2000, the Labor Arbiter rendered judgment in favor of the Complainant and
against the Respondents, the decretal portion of which reads as follows:
‘WHEREFORE, considering the foregoing premises, judgment is hereby rendered finding
respondents guilty of Illegal dismissal and devoid of due process, and are hereby ordered:
1. To reinstate complainant to her former or substantially equivalent position without loss of
seniority rights, benefits and privileges;
2. Solidarily liable to pay complainant as follows:
a) To pay complainant her backwages from 16 April 1999 up to her actual reinstatement. Her
backwages as of the date of the promulgation of this decision amounted to SGD 40,500.00 or
its equivalent in Philippine Currency at the time of payment;
b) Mid-year bonus in the amount of SGD 2,250.00 or its equivalent in Philippine Currency at
the time of payment;
c) Allowance for Sunday banking in the amount of SGD 120.00 or its equivalent in Philippine
Currency at the time of payment;
d) Monetary equivalent of leave credits earned on Sunday banking in the amount of SGD
1,557.67 or its equivalent in Philippine Currency at the time of payment;
e) Monetary equivalent of unused sick leave benefits in the amount of SGD 1,150.60 or its
equivalent in Philippine Currency at the time of payment.
207
f) Monetary equivalent of unused vacation leave benefits in the amount of SGD 319.85 or its
equivalent in Philippine Currency at the time of payment.
g) 13th month pay in the amount of SGD 4,500.00 or its equivalent in Philippine Currency at
the time of payment;
3. Solidarily to pay complainant actual damages in the amount of SGD 1,978.00 or its
equivalent in Philippine Currency at the time of payment, and moral damages in the amount
of PhP 200,000.00, exemplary damages in the amount of PhP 100,000.00;
4. To pay complainant the amount of SGD 5,039.81 or its equivalent in Philippine Currency
at the time of payment, representing attorney’s fees.
6
SO ORDERED." [Emphasis in the original.]
PNB appealed the labor arbiter’s Decision to the NLRC. In a Resolution dated June 29, 2001,
the Commission affirmed that Decision, but reduced the moral damages to ₱100,000 and the
exemplary damages to ₱50,000. In a subsequent Resolution, the NLRC denied PNB’s Motion
for Reconsideration.
Ruling of the Court of Appeals
In disposing of the Petition for Certiorari, the CA noted that petitioner bank had failed to
adduce in evidence the Singaporean law supposedly governing the latter’s employment
Contract with respondent. The appellate court found that the Contract had actually been
processed by the Philippine Embassy in Singapore and approved by the Philippine Overseas
Employment Administration (POEA), which then used that Contract as a basis for issuing an
Overseas Employment Certificate in favor of respondent.
According to the CA, even though respondent secured an employment pass from the
Singapore Ministry of Employment, she did not thereby waive Philippine labor laws, or the
jurisdiction of the labor arbiter or the NLRC over her Complaint for illegal dismissal. In so
doing, neither did she submit herself solely to the Ministry of Manpower of Singapore’s
jurisdiction over disputes arising from her employment. The appellate court further noted that
a cursory reading of the Ministry’s letter will readily show that no such waiver or submission
is stated or implied.
Finally, the CA held that petitioner had failed to establish a just cause for the dismissal of
respondent. The bank had also failed to give her sufficient notice and an opportunity to be
heard and to defend herself. The CA ruled that she was consequently entitled to reinstatement
and back wages, computed from the time of her dismissal up to the time of her reinstatement.
Hence, this Petition.7
Issues
Petitioner submits the following issues for our consideration:
"1. Whether or not the arbitration branch of the NLRC in the National Capital Region has
jurisdiction over the instant controversy;
"2. Whether or not the arbitration of the NLRC in the National Capital Region is the most
convenient venue or forum to hear and decide the instant controversy; and
"3. Whether or not the respondent was illegally dismissed, and therefore, entitled to recover
moral and exemplary damages and attorney’s fees." 8
In addition, respondent assails, in her Comment,9 the propriety of Rule 45 as the procedural
mode for seeking a review of the CA Decision affirming the NLRC Resolution. Such issue
deserves scant consideration. Respondent miscomprehends the Court’s discourse in St. Martin
Funeral Home v. NLRC,10 which has indeed affirmed that the proper mode of review of NLRC
decisions, resolutions or orders is by a special civil action for certiorari under Rule 65 of the
Rules of Court. The Supreme Court and the Court of Appeals have concurrent original
jurisdiction over such petitions for certiorari. Thus, in observance of the doctrine on the
hierarchy of courts, these petitions should be initially filed with the CA. 11
Rightly, the bank elevated the NLRC Resolution to the CA by way of a Petition for Certiorari.
In seeking a review by this Court of the CA Decision -- on questions of jurisdiction, venue and
validity of employment termination -- petitioner is likewise correct in invoking Rule 45.12
It is true, however, that in a petition for review on certiorari, the scope of the Supreme Court’s
judicial review of decisions of the Court of Appeals is generally confined only to errors of law.
It does not extend to questions of fact. This doctrine applies with greater force in labor cases.
Factual questions are for the labor tribunals to resolve. 13 In the present case, the labor arbiter
and the NLRC have already determined the factual issues. Their findings, which are supported
by substantial evidence, were affirmed by the CA. Thus, they are entitled to great respect and
are rendered conclusive upon this Court, absent a clear showing of palpable error or arbitrary
disregard of evidence.14
The Court’s Ruling
The Petition has no merit.
First Issue:
Jurisdiction
208
The jurisdiction of labor arbiters and the NLRC is specified in Article 217 of the Labor Code as
follows:
"ART. 217. Jurisdiction of Labor Arbiters and the Commission. – (a) Except as otherwise
provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to
hear and decide, within thirty (30) calendar days after the submission of the case by the
parties for decision without extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wage, rates of pay, hours of work and other terms and conditions of employment
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving
the legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims, arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount of exceeding five thousand
pesos (₱5,000.00) regardless of whether accompanied with a claim for reinstatement.
(b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters.
x x x x x x x x x."
More specifically, Section 10 of RA 8042 reads in part:
"SECTION 10. Money Claims. — Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of
the complaint, the claims arising out of an employer-employee relationship or by virtue of
any law or contract involving Filipino workers for overseas deployment including claims for
actual, moral, exemplary and other forms of damages.
x x x x x x x x x"
Based on the foregoing provisions, labor arbiters clearly have original and exclusive
jurisdiction over claims arising from employer-employee relations, including termination
disputes involving all workers, among whom are overseas Filipino workers (OFW).15
We are not unmindful of the fact that respondent was directly hired, while on a tourist status
in Singapore, by the PNB branch in that city state. Prior to employing respondent, petitioner
had to obtain an employment pass for her from the Singapore Ministry of Manpower. Securing
the pass was a regulatory requirement pursuant to the immigration regulations of that
country.16
Similarly, the Philippine government requires non-Filipinos working in the country to first
obtain a local work permit in order to be legally employed here. That permit, however, does
not automatically mean that the non-citizen is thereby bound by local laws only, as averred
by petitioner. It does not at all imply a waiver of one’s national laws on labor. Absent any
clear and convincing evidence to the contrary, such permit simply means that its holder has
a legal status as a worker in the issuing country.1avvphil.zw+
Noteworthy is the fact that respondent likewise applied for and secured an Overseas
Employment Certificate from the POEA through the Philippine Embassy in Singapore. The
Certificate, issued on March 8, 1999, declared her a bona fide contract worker for Singapore.
Under Philippine law, this document authorized her working status in a foreign country and
entitled her to all benefits and processes under our statutes. Thus, even assuming arguendo
that she was considered at the start of her employment as a "direct hire" governed by and
subject to the laws, common practices and customs prevailing in Singapore 17 she
subsequently became a contract worker or an OFW who was covered by Philippine labor laws
and policies upon certification by the POEA. At the time her employment was illegally
terminated, she already possessed the POEA employment Certificate.
Moreover, petitioner admits that it is a Philippine corporation doing business through a branch
office in Singapore.18 Significantly, respondent’s employment by the Singapore branch office
had to be approved by Benjamin P. Palma Gil,19 the president of the bank whose principal
offices were in Manila. This circumstance militates against petitioner’s contention that
respondent was "locally hired"; and totally "governed by and subject to the laws, common
practices and customs" of Singapore, not of the Philippines. Instead, with more reason does
this fact reinforce the presumption that respondent falls under the legal definition of migrant
worker, in this case one deployed in Singapore. Hence, petitioner cannot escape the
application of Philippine laws or the jurisdiction of the NLRC and the labor arbiter.
In any event, we recall the following policy pronouncement of the Court in Royal Crown
Internationale v. NLRC:20
"x x x. Whether employed locally or overseas, all Filipino workers enjoy the protective mantle
of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding.
This pronouncement is in keeping with the basic public policy of the State to afford protection
209
to labor, promote full employment, ensure equal work opportunities regardless of sex, race
or creed, and regulate the relations between workers and employers.1awphi1.net For the
State assures the basic rights of all workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work [Article 3 of the Labor Code of the
Philippines; See also Section 18, Article II and Section 3, Article XIII, 1987 Constitution]. This
ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws
‘which have for their object public order, public policy and good customs shall not be rendered
ineffective by laws or judgments promulgated, or by determination or conventions agreed
upon in a foreign country.’"
Second Issue:
Proper Venue
Section 1(a) of Rule IV of the NLRC Rules of Procedure reads:
"Section 1. Venue – (a) All cases which Labor Arbiters have authority to hear and decide may
be filed in the Regional Arbitration Branch having jurisdiction over the workplace of the
complainant/petitioner; Provided, however that cases of Overseas Filipino Worker (OFW) shall
be filed before the Regional Arbitration Branch where the complainant resides or where the
principal office of the respondent/employer is situated, at the option of the complainant.
"For purposes of venue, workplace shall be understood as the place or locality where the
employee is regularly assigned when the cause of action arose. It shall include the place
where the employee is supposed to report back after a temporary detail, assignment or travel.
In the case of field employees, as well as ambulant or itinerant workers, their workplace is
where they are regularly assigned, or where they are supposed to regularly receive their
salaries/wages or work instructions from, and report the results of their assignment to their
employers."
Under the "Migrant Workers and Overseas Filipinos Act of 1995" (RA 8042), a migrant worker
"refers to a person who is to be engaged, is engaged or has been engaged in a remunerated
activity in a state of which he or she is not a legal resident; to be used interchangeably with
overseas Filipino worker."21 Undeniably, respondent was employed by petitioner in its branch
office in Singapore. Admittedly, she is a Filipino and not a legal resident of that state. She
thus falls within the category of "migrant worker" or "overseas Filipino worker."
As such, it is her option to choose the venue of her Complaint against petitioner for illegal
dismissal. The law gives her two choices: (1) at the Regional Arbitration Branch (RAB) where
she resides or (2) at the RAB where the principal office of her employer is situated. Since her
dismissal by petitioner, respondent has returned to the Philippines -- specifically to her
residence at Filinvest II, Quezon City. Thus, in filing her Complaint before the RAB office in
Quezon City, she has made a valid choice of proper venue.
Third Issue:
Illegal Dismissal
The appellate court was correct in holding that respondent was already a regular employee
at the time of her dismissal, because her three-month probationary period of employment
had already ended. This ruling is in accordance with Article 281 of the Labor Code: "An
employee who is allowed to work after a probationary period shall be considered a regular
employee." Indeed, petitioner recognized respondent as such at the time it dismissed her, by
giving her one month’s salary in lieu of a one-month notice, consistent with provision No. 6
of her employment Contract.
Notice and Hearing Not Complied With
As a regular employee, respondent was entitled to all rights, benefits and privileges provided
under our labor laws. One of her fundamental rights is that she may not be dismissed without
due process of law. The twin requirements of notice and hearing constitute the essential
elements of procedural due process, and neither of these elements can be eliminated without
running afoul of the constitutional guarantee.22
In dismissing employees, the employer must furnish them two written notices: 1) one to
apprise them of the particular acts or omissions for which their dismissal is sought; and 2)
the other to inform them of the decision to dismiss them. As to the requirement of a hearing,
its essence lies simply in the opportunity to be heard. 23
The evidence in this case is crystal-clear. Respondent was not notified of the specific act or
omission for which her dismissal was being sought. Neither was she given any chance to be
heard, as required by law. At any rate, even if she were given the opportunity to be heard,
she could not have defended herself effectively, for she knew no cause to answer to.
All that petitioner tendered to respondent was a notice of her employment termination
effective the very same day, together with the equivalent of a one-month pay. This Court has
already held that nothing in the law gives an employer the option to substitute the required
prior notice and opportunity to be heard with the mere payment of 30 days’ salary.24
Well-settled is the rule that the employer shall be sanctioned for noncompliance with the
requirements of, or for failure to observe, due process that must be observed in dismissing
an employee.25
No Valid Cause for Dismissal
Moreover, Articles 282,26 28327 and 28428 of the Labor Code provide the valid grounds or
causes for an employee’s dismissal. The employer has the burden of proving that it was done
210
for any of those just or authorized causes. The failure to discharge this burden means that
the dismissal was not justified, and that the employee is entitled to reinstatement and back
wages.29
Notably, petitioner has not asserted any of the grounds provided by law as a valid reason for
terminating the employment of respondent. It merely insists that her dismissal was validly
effected pursuant to the provisions of her employment Contract, which she had voluntarily
agreed to be bound to.
Truly, the contracting parties may establish such stipulations, clauses, terms and conditions
as they want, and their agreement would have the force of law between them. However,
petitioner overlooks the qualification that those terms and conditions agreed upon must not
be contrary to law, morals, customs, public policy or public order.30 As explained earlier, the
employment Contract between petitioner and respondent is governed by Philippine labor laws.
Hence, the stipulations, clauses, and terms and conditions of the Contract must not
contravene our labor law provisions.
Moreover, a contract of employment is imbued with public interest. The Court has time and
time again reminded parties that they "are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply contracting with each
other."31 Also, while a contract is the law between the parties, the provisions of positive law
that regulate such contracts are deemed included and shall limit and govern the relations
between the parties.32
Basic in our jurisprudence is the principle that when there is no showing of any clear, valid,
and legal cause for the termination of employment, the law considers the matter a case of
illegal dismissal.33
Awards for Damages Justified
Finally, moral damages are recoverable when the dismissal of an employee is attended by
bad faith or constitutes an act oppressive to labor or is done in a manner contrary to morals,
good customs or public policy.34 Awards for moral and exemplary damages would be proper
if the employee was harassed and arbitrarily dismissed by the employer.35
In affirming the awards of moral and exemplary damages, we quote with approval the
following ratiocination of the labor arbiter:
"The records also show that [respondent’s] dismissal was effected by [petitioners’] capricious
and high-handed manner, anti-social and oppressive, fraudulent and in bad faith, and contrary
to morals, good customs and public policy. Bad faith and fraud are shown in the acts
committed by [petitioners] before, during and after [respondent’s] dismissal in addition to
the manner by which she was dismissed. First, [respondent] was pressured to resign for two
different and contradictory reasons, namely, cost-cutting and the need for a Chinese[-
]speaking credit officer, for which no written advice was given despite complainant’s request.
Such wavering stance or vacillating position indicates bad faith and a dishonest purpose.
Second, she was employed on account of her qualifications, experience and readiness for the
position of credit officer and pressured to resign a month after she was commended for her
good work. Third, the demand for [respondent’s] instant resignation on 19 April 1999 to give
way to her replacement who was allegedly reporting soonest, is whimsical, fraudulent and in
bad faith, because on 16 April 1999 she was given a period of [sic] until 15 May 1999 within
which to leave. Fourth, the pressures made on her to resign were highly oppressive, anti-
social and caused her absolute torture, as [petitioners] disregarded her situation as an
overseas worker away from home and family, with no prospect for another job. She was not
even provided with a return trip fare. Fifth, the notice of termination is an utter manifestation
of bad faith and whim as it totally disregards [respondent’s] right to security of tenure and
due process. Such notice together with the demands for [respondent’s] resignation
contravenes the fundamental guarantee and public policy of the Philippine government on
security of tenure.
"[Respondent] likewise established that as a proximate result of her dismissal and prior
demands for resignation, she suffered and continues to suffer mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock and social humiliation. Her
standing in the social and business community as well as prospects for employment with other
entities have been adversely affected by her dismissal. [Petitioners] are thus liable for moral
damages under Article 2217 of the Civil Code.
xxxxxxxxx
"[Petitioners] likewise acted in a wanton, oppressive or malevolent manner in terminating
[respondent’s] employment and are therefore liable for exemplary damages. This should
served [sic] as protection to other employees of [petitioner] company, and by way of example
or correction for the public good so that persons similarly minded as [petitioners] would be
deterred from committing the same acts."36
The Court also affirms the award of attorney’s fees. It is settled that when an action is
instituted for the recovery of wages, or when employees are forced to litigate and
consequently incur expenses to protect their rights and interests, the grant of attorney’s fees
is legally justifiable.37
WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED.
Costs against petitioner.
SO ORDERED.
G.R. No. 208686 July 1, 2015
211
PEOPLE OF THE PHILIPPINES, Appellee,
vs.
ALELIE TOLENTINO a.k.a. "Alelie Tolentino y Hernandez," Appellant.
DECISION
CARPIO, J.:
This is an appeal from the 29 November 2012 Decision1 of the Court of Appeals in CA-G.R.
CR-HC No. 04558, affirming the trial court's decision, finding appellant Alelie Tolentino
(appellant) guilty beyond reasonable doubt of illegal recruitment and estafa.
The Facts
Appellant was charged with illegal recruitment and five (5) counts of estafa under Article 315,
paragraph 2(a) of the Revised Penal Code. The Informations against appellant read:
CRIM. CASE NO. 02-755
The undersigned Assistant City Prosecutor accuses ALELIE TOLENTINO of the crime of Illegal
Recruitment committed as follows:
That on or about [or sometime in] the last week of August, 2001 and 1st week of November,
2001 and thereafter, in the City of Muntinlupa, Philippines and within the jurisdiction of this
Honorable Court, the above-named accused jointly with NARCISA SANTOS did then and there
willfully, unlawfully and feloniously advertise for employment, enlist, contract and promise
employment to the following persons: LEDERLE PANESA, ORLANDO LAYOSO, JIMMY LEJOS,
MARCELINO LEJOS and DONNA MAGBOO for a fee without first securing license and/or permit
from the government agency concerned.
Contrary to law.2
CRIM. CASE NO. 02-756
The undersigned Assistant City Prosecutor accuses ALELIE TOLENTINO of the crime of Estafa
under Art. 315 Par. 2(a) of the Revised Penal Code, as amended, committed as follows:
That on or about or sometime in the first week of August 2001 and thereafter, in the City of
Muntinlupa, Philippines and within the jurisdiction of this Honorable Court, the above-named
accused, by means of deceit, fraudulent acts and false pretenses executed prior to or
simultaneously with the commission of the fraud, did [then] and there willfully, unlawfully
and feloniously defraud one LEDERLE PANESA, in the following manner: accused represented
to the said complainant that she could secure work for the said complainant at Korea and she
is capable of processing the travel visa and other documents for her travel and employment
at Korea and demanded from the said complainant to pay the amount of ₱75,000.00 as
placement fee; accused well knew that such representations were false and made only to
induce complainant to part with her money as in fact complainant gave and delivered the
amount of ₱15,000.00 as partial payment to the accused; and accused once in possession of
the said amount, did then and there willfully, unlawfully and feloniously misappropriate,
misapply and convert the same to her own personal use and benefit to the damage and
prejudice of the said complainant in the amount of ₱15,000.00.
Contrary to law.3
CRIM. CASE NO. 02-757
The undersigned Assistant City Prosecutor accuses ALELIE TOLENTINO of the crime of Estafa
under Art. 315 Par. 2(a) of the Revised Penal Code, as amended, committed as follows:
That on or about or sometime in the first week of November, 2001 and thereafter, in the City
of Muntinlupa, Philippines and within the jurisdiction of this Honorable Court, the above-
named accused conspiring and confederating with NARCISA SANTOS, and both of them
mutually helping and aiding one another, by means of deceit, fraudulent acts and false
pretenses executed prior to or simultaneously with the commission of the fraud, did [then]
and there willfully, unlawfully and feloniously defraud one ORLANDO LAYOSO, in the following
manner: accused represented to the said complainant that she could secure work for the said
complainant at Korea and she is capable of processing the travel visa and other documents
for [his] travel and employment at Korea and demanded from the said complainant to pay
the amount of ₱80,000.00 as placement fee; accused well knew that such representations
were false and made only to induce complainant to part with [his] money as in fact
complainant gave and delivered the amount of ₱35,000.00 as partial payment to the accused;
and accused once in possession of the said amount, did then and there willfully, unlawfully
and feloniously misappropriate, misapply and convert the same to her own personal use and
benefit to the damage and prejudice of the said complainant in the amount of ₱35,000.00.
Contrary to law.4
CRIM. CASE NO. 02-758
The undersigned Assistant City Prosecutor accuses ALELIE TOLENTINO of the crime of Estafa
under Art. 315 Par. 2(a) of the Revised Penal Code, as amended, committed as follows:
That on or about or sometime in the first week of November, 2001 and thereafter, in the City
of Muntinlupa, Philippines and within the jurisdiction of this Honorable Court, the above-
named accused conspiring and confederating with NARCISA SANTOS, and both of them
mutually helping and aiding one another, by means of deceit, fraudulent acts and false
pretenses executed prior to or simultaneously with the commission of the fraud, did [then]
212
and there willfully, unlawfully and feloniously defraud one DONNA MAGBOO, in the following
manner: accused represented to the said complainant that she could secure work for the said
complainant at Korea and she is capable of processing the travel visa and other documents
for her travel and employment at Korea and demanded from the said complainant to pay the
amount of ₱80,000.00 as placement fee; accused well knew that such representations were
false and made only to induce complainant to part with her money as in fact complainant
gave and delivered the amount of ₱35,000.00 as partial payment to the accused; and accused
once in possession of the said amount, did then and there willfully, unlawfully and feloniously
misappropriate, misapply and convert the same to her own personal use and benefit to the
damage and prejudice of the said complainant in the amount of ₱35,000.00.
Contrary to law.5
CRIM. CASE NO. 02-759
The undersigned Assistant City Prosecutor accuses ALELIE TOLENTINO of the crime of Estafa
under Art. 315 Par. 2(a) of the Revised Penal Code, as amended, committed as follows: That
on or about or sometime in the first week of November, 2001 and thereafter, in the City of
Muntinlupa, Philippines and within the jurisdiction of this Honorable Court, the above-named
accused conspiring and confederating with NARCISA SANTOS, and both of them mutually
helping and aiding one another, by means of deceit, fraudulent acts and false pretenses
executed prior to or simultaneously with the commission of the fraud, did [then] and there
willfully, unlawfully and feloniously defraud one JIMMY LEJOS, in the following manner:
accused represented to the said complainant that she could secure work for the said
complainant at Korea and she is capable of processing the travel visa and other documents
for [his] travel and employment at Korea and demanded from the said complainant to pay
the amount of ₱80,000.00 as placement fee; accused well knew that such representations
were false and made only to induce complainant to part with [his] money as in fact
complainant gave and delivered the amount of ₱35,000.00 as partial payment to the accused;
and accused once in possession of the said amount, did then and there willfully, unlawfully
and feloniously misappropriate, misapply and convert the same to her own personal use and
benefit to the damage and prejudice of the said complainant in the amount of ₱35,000.00.
Contrary to law.6
CRIM. CASE NO. 02-760
The undersigned Assistant City Prosecutor accuses ALELIE TOLENTINO of the crime of Estafa
under Art. 315 Par. 2(a) of the Revised Penal Code, as amended, committed as follows:
That on or about or sometime in the first week of November, 2001 and thereafter, in the City
of Muntinlupa, Philippines and within the jurisdiction of this Honorable Court, the above-
named accused conspiring and confederating with NARCISA SANTOS, and both of them
mutually helping and aiding one another, by means of deceit, fraudulent acts and false
pretenses executed prior to or simultaneously with the commission of the fraud, did [then]
and there willfully, unlawfully and feloniously defraud one MARCELINO LEJOS, in the following
manner: accused represented to the said complainant that she could secure work for the said
complainant at Korea and she is capable of processing the travel visa and other documents
for [his] travel and employment at Korea and demanded from the said complainant to pay
the amount of ₱80,000.00 as placement fee; accused well knew that such representations
were false and made only to induce complainant to part with [his] money as in fact
complainant gave and delivered the amount of ₱20,000.00 as partial payment to the accused;
and accused once in possession of the said amount, did then and there willfully, unlawfully
and feloniously misappropriate, misapply and convert the same to her own personal use and
benefit to the damage and prejudice of the said complainant in the amount of ₱20,000.00.
Contrary to law.7
Private complainants Orlando Layoso, Donna Magboo, Jimmy Lejos, and Marcelino Lejos8
alleged that sometime in the first week of November 2001, they had a meeting with appellant
Alelie Tolentino (appellant) in her office at the 3rd floor, Arevalo Building, Alabang, Muntinlupa
City. Appellant told them the procedure for overseas employment and offered them assistance
to find work abroad for a fee of ₱80,000. Appellant showed them pictures of those she
allegedly helped find work abroad and told them that they would be earning $630 monthly as
factory workers in Korea. When asked about her license to recruit overseas workers, appellant
told private complainants that she would show it to them at some other time. On 14 November
2001, private complainants again met with appellant at her office and each of them gave
appellant ₱20,000 as partial payment of the agreed fee, which included expenses for medical
examination and processing of their documents for work in Korea. Appellant promised to
secure their visas and employment contracts within three months.
On 30 January 2002, private complainants met with appellant, who was accompanied by a
certain Narcisa Santos, at Wendy’s in Arquiza Street, Manila for signing of contract. However,
the names written on the employment contracts were not private complainants’ names.
Appellant explained that the contracts were supposedly for other applicants who sought her
services but later backed out. Appellant assured them that original contracts bearing their
names would subsequently be provided. Private complainants signed the contracts and paid
₱15,000 each as their second partial payment.
On 7 February 2002, private complainants received information that the Criminal
Investigation and Detection Group arrested appellant for illegal recruitment. When private
complainants confronted appellant at the Manila City Hall where she was held, they demanded
the return of their payments amounting to ₱35,000 each, except for Marcelino Lejos whose
total payment only amounted to ₱20,000. Appellant denied the charges against her and
promised them that they would get their money back. Subsequently, private complainants
were able to secure a certification from the Philippine Overseas Employment Administration
(POEA) that appellant was not licensed to recruit workers for overseas employment.
213
Another complainant, Lederle Panesa, alleged that in August 2001, she met with appellant,
who offered her work in Korea for a placement fee of ₱75,000. On 7 September 2001, Panesa
gave appellant ₱15,000 as initial payment. Appellant assured Panesa that she would be
leaving for Korea on the second week of November 2001 and that the balance of the
placement fee could be paid upon her receipt of the visa. However, after said meeting, Panesa
no longer heard from appellant, which prompted Panesa to visit appellant’s office. Appellant
informed Panesa that there were no job openings in Korea at that time. Appellant offered
Panesa employment in other countries such as Malaysia and Palau, but Panesa refused the
offer and demanded the return of her money. Nevertheless, appellant was able to persuade
Panesa to wait until December 2001. Appellant never contacted Panesa thereafter. On 7
February 2002,Panesa was informed that appellant was apprehended for illegal recruitment.
Panesa proceeded to the Office of the City Prosecutor in Manila, but failed to confront
appellant. It was only then that Panesa learned about appellant not being authorized by the
POEA to recruit workers for overseas employment.
For the defense, appellant was presented as the lone witness. Appellant denied the charges
against her. She testified that she was introduced to private complainants by a certain Cezar
Manonson and that the owner of the office she is renting is her relative. Private complainants
allegedly sought her help regarding possible work in Korea and that she merely explained the
procedure for overseas employment to them. She was hesitant to help them because she
does not recruit workers as she herself was also applying for work as factory worker through
Narcisa Santos. She admitted having received money from private complainants and issuing
receipts for the payments, upon instructions from Narcisa Santos. She confirmed her
signature on the petty cash vouchers she issued to private complainants, evidencing their
payments. She testified that she gave the payments to Narcisa Santos. However, she
admitted that she does not have proof that she indeed turned over the money to Narcisa
Santos.
On 9 June 2010, the trial court rendered a decision, the dispositive portion of which reads:
WHEREFORE, the Court finds accused Alelie (also known as Alelie Tolentino) guilty beyond
reasonable doubt of the offense of large scale illegal recruitment, which constitutes economic
sabotage in Criminal Case Case No. 02-755 and sentences her to life imprisonment and to
pay a fine of ₱500,000.00; and five counts of estafa under Article 315 2(a) of the Revised
Penal Code, as amended, in the following criminal cases and sentences her, as follows:
In Criminal Case No. 02-756, an indeterminate penalty of six months of arresto mayor in its
maximum to four years two months and one day of prision correccional in its maximum as
the maximum period, and to pay the private complainant the amount of ₱5,000.00 as and for
moral damages. Accused is further ordered to return the amount of ₱15,000.00 she illegally
collected from the private complainant.
In Criminal Case Nos. 02-757, 02-758 and 02-759, an indeterminate penalty [of] six months
of arresto mayor in its maximum to twelve years of prision mayor in its maximum, and to pay
the private complainants individually each in the amount of ₱15,000.00 as and for moral
damages. Accused is further ordered to return the amount of ₱35,000.00 she illegally
collected each from the private complainants.
In Criminal Case No. 02-760, an indeterminate penalty of six months of arresto mayor in its
maximum as the minimum period to six years and one day of prision mayor in its minimum
as the maximum period, and to pay the private complainant the amount of ₱8,000.00 as and
for moral damages. Accused is further ordered to return the amount of ₱20,000.00 she
illegally collected from the private complainant.
Her full period of preventive imprisonment shall be credited in her favor in accordance with
Article 29 of the Revised Penal Code.
SO ORDERED.9
The Ruling of the Court of Appeals
On appeal, the Court of Appeals affirmed the trial court’s decision. The Court of Appeals held
that the prosecution adequately proved that appellant engaged in illegal recruitment in large
scale. The Court of Appeals noted that appellant admitted that she had no authority or valid
license to engage in recruitment and placement of workers. The testimonies and the
documentary evidence submitted by the prosecution showed that appellant led complainants
to believe that she had the power or ability to send private complainants to Korea to work as
factory workers and that the latter were convinced to give their payment to appellant in order
to be employed. Appellant even issued petty cash vouchers acknowledging receipt of private
complainants’ payment and she made them sign Trainee Agreements, which were purportedly
their contract with their Korean employer. Based on the facts and evidence presented, the
Court of Appeals concluded that appellant clearly engaged in illegal recruitment activities.
Appellant’s claim that it was Narcisa Santos who recruited the private complainants and who
profited from the illegal transaction was disregarded by the Court of Appeals for lack of
evidence. The Court of Appeals noted that it was appellant who dealt directly with private
complainants.
On the charge of estafa, the Court of Appeals likewise upheld appellant’s conviction for said
crime. The evidence presented to prove appellant’s liability for illegal recruitment also
established her liability for estafa. The Court of Appeals ruled that a person may be charged
and convicted separately of illegal recruitment under Republic Act No. 8042 (RA 8042) in
relation to the Labor Code, and estafa under Article 315, paragraph 2(a) of the Revised Penal
Code.
Hence, this appeal.
The Court's Ruling
214
We find the appeal without merit. The Court of Appeals was correct in affirming the ruling of
the trial court that the appellant’s guilt of the crimes she was accused of was clearly
established by the witnesses and the evidence of the prosecution.
Illegal Recruitment in Large Scale
Article 13(b) of the Labor Code defines recruitment and placement as "any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes
referrals, contract services, promising or advertising for employment, locally or abroad,
whether for profit or not."
Illegal recruitment, on the other hand is defined under Article 38 of the Labor Code as follows:
ART. 38. Illegal Recruitment
(a) Any recruitment activities, including the prohibited practices enumerated under Article
34of this Code, to be undertaken by non-licensees or non-holders of authority shall be deemed
illegal and punishable under Article 39 of this Code. The Department of Labor and Employment
or any law enforcement officer may initiate complaints under this Article.
(b) Illegal recruitment when committed by a syndicate or in large scale shall be considered
an offense involving economic sabotage and shall be penalized in accordance with Article 39
hereof. Illegal recruitment is deemed committed by a syndicate if carried out by a group of
three (3) or more persons conspiring and/or confederating with one another in carrying out
any unlawful or illegal transaction, enterprise or scheme defined under the first paragraph
hereof. Illegal recruitment is deemed committed in large scale if committed against three (3)
or more persons individually or as a group.
(c) The Secretary of Labor and Employment or his duly authorized representatives shall have
the power to cause the arrest and detention of such non-licensee or non-holder of authority
if after investigation it is determined that his activities constitute a danger to national security
and public order or will lead to further exploitation of job-seekers. The Secretary shall order
the search of the office or premises and seizure of documents, paraphernalia, properties and
other implements used in illegal recruitment activities and the closure of companies,
establishments and entities found to be engaged in the recruitment of workers for overseas
employment, without having been licensed or authorized to do so. (Emphases supplied)
Illegal recruitment, as defined under Article 38 of the Labor Code, encompasses recruitment
activities for both local and overseas employment. However, illegal recruitment under this
article is limited to recruitment activities undertaken by non-licensees or non-holders of
authority.10 Thus, under the Labor Code, to constitute illegal recruitment in large scale, three
elements must concur:
1. The accused undertook any recruitment activity defined under Art. 13 (b) or any prohibited
practice enumerated under Art. 34 of the Labor Code.
2. He did not have the license or the authority to lawfully engage in the recruitment and
placement of workers.
3. He committed the same against three or more persons, individually or as a group.11
RA 8042,12 otherwise known as the "Migrant Workers and Overseas Filipinos Act of 1995,"
established a higher standard of protection and promotion of the welfare of the migrant
workers, their families and overseas Filipinos in distress. RA 8042 also broadened the concept
of illegal recruitment for overseas employment and increased the penalties, especially for
Illegal Recruitment in Large Scale and Illegal Recruitment Committed by a Syndicate, which
are considered offenses involving economic sabotage.13 Part II of RA 8042 defines and
penalizes illegal recruitment for employment abroad, whether undertaken by a non-licensee
or non-holder of authority or by a licensee or holder of authority.
Section 6 of RA 8042 provides for the definition of illegal recruitment, while Section 7
enumerates the penalties therefor, thus:
SEC. 6. Definition. – For purposes of this Act, illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and
includes referring, contract services, promising or advertising for employment abroad,
whether for profit or not, when undertaken by a non-licensee or non-holder of authority
contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise
known as the Labor Code of the Philippines: Provided, That any such non-licensee or non-
holder who, in any manner, offers or promises for a fee employment abroad for two or more
persons shall be deemed so engaged. It shall likewise include the following acts, whether
committed by any person, whether a non-licensee, non-holder, licensee or holder of authority:
(a) To charge or accept directly or indirectly any amount greater than that specified in the
schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make
a worker pay any amount greater than that actually received by him as a loan or advance;
(b) To furnish or publish any false notice or information or document in relation to recruitment
or employment;
(c) To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under the Labor Code;
(d) To induce or attempt to induce a worker already employed to quit his employment in order
to offer him another unless the transfer is designed to liberate a worker from oppressive terms
and conditions of employment;
(e) To influence or attempt to influence any person or entity not to employ any worker who
has not applied for employment through his agency;
215
(f) To engage in the recruitment or placement of workers in jobs harmful to public health or
morality or to the dignity of the Republic of the Philippines;
(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor and Employment
or by his duly authorized representative;
(h) To fail to submit reports on the status of employment, placement vacancies, remittance
of foreign exchange earnings, separation from jobs, departures and such other matters or
information as may be required by the Secretary of Labor and Employment;
(i) To substitute or alter to the prejudice of the worker, employment contracts approved and
verified by the Department of Labor and Employment from the time of actual signing thereof
by the parties up to and including the period of the expiration of the same without the approval
of the Department of Labor and Employment;
(j) For an officer or agent of a recruitment or placement agency to become an officer or
member of the Board of any corporation engaged in travel agency or to be engaged directly
or indirectly in the management of a travel agency;
(k) To withhold or deny travel documents from applicant workers before departure for
monetary or financial considerations other than those authorized under the Labor Code and
its implementing rules and regulations;
(l) Failure to actually deploy without valid reason as determined by the Department of Labor
and Employment; and
(m) Failure to reimburse expenses incurred by the worker in connection with his
documentation and processing for purposes of deployment, in cases where the deployment
does not actually take place without the worker’s fault. Illegal recruitment when committed
by a syndicate or in large scale shall be considered an offense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3)
or more persons conspiring or confederating with one another. It is deemed committed in
large scale if committed against three (3) or more persons individually or as a group.
The persons liable for the above offenses are the principals, accomplices and accessories. In
case of juridical persons, the officers having control, management or direction of their
business shall be liable.
SEC. 7. Penalties. –
(a) Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of
not less than six (6) years and one (1) day but not more than twelve (12) years and a fine of
not less than Two hundred thousand pesos (₱200,000.00) nor more than Five hundred
thousand pesos (₱500,000.00).
(b) The penalty of life imprisonment and a fine of not less than Five hundred thousand pesos
(₱500,000.00) nor more than One million pesos (₱1,000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as defined herein.
Provided, however, That the maximum penalty shall be imposed If the person illegally
recruited is less than eighteen (18) years of age or committed by a non-licensee or non-holder
of authority. (Emphases supplied)
Unlike illegal recruitment as defined under the Labor Code which is limited to recruitment
activities undertaken by non-licensees or non-holders of authority, under Article 6 of RA 8042,
illegal recruitment (for overseas employment) may be committed not only by non-licensees
or non-holders of authority but also by licensees or holders of authority. Article 6 enumerates
thirteen acts or practices [(a) to (m)] which constitute illegal recruitment, whether committed
by any person, whether a non-licensee, non-holder, licensee or holder of authority. Except
for the last two acts [(l) and (m)] on the list under Article 6 of RA8042, the first eleven acts
or practices are also listed in Article 3414 of the Labor Code under the heading "Prohibited
practices." Thus, under Article 34 of the Labor Code, it is unlawful for any individual, entity,
licensee or holder of authority to engage in any of the enumerated prohibited practices, but
such acts or practices do not constitute illegal recruitment when undertaken by a licensee or
holder of authority. However, under Article 38(A) of the Labor Code, when a non-licensee or
non-holder of authority undertakes such "prohibited practices," he or she is liable for illegal
recruitment. RA 8042 broadened the definition of illegal recruitment for overseas employment
by including thirteen acts or practices which now constitute as illegal recruitment, whether
committed by a non-licensee, non-holder, licensee or holder of authority.
Under RA 8042, a non-licensee or non-holder of authority commits illegal recruitment for
overseas employment in two ways: (1) by any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring workers, and includes referring, contract services,
promising or advertising for employment abroad, whether for profit or not; and (2) by
undertaking any of the acts enumerated under Section 6 of RA 8042. On the other hand, a
licensee or holder of authority is also liable for illegal recruitment for overseas employment
when he or she undertakes any of the thirteen acts or practices [(a) to (m)] listed under
Section 6 of RA 8042. To constitute illegal recruitment in large scale, the offense of illegal
recruitment must be committed against three or more persons, individually or as a group.
In this case, the prosecution sufficiently proved that appellant engaged in large-scale illegal
recruitment.
First, appellant is a non-licensee or non-holder of authority. Part of the evidence submitted
by the prosecution is a POEA Certification15 dated 10 March 2003, stating that appellant is
not licensed by the POEA to recruit workers for overseas employment. Appellant admitted
216
that she has no valid license or authority required by law to lawfully engage in recruitment
and placement of workers.
Second, despite the absence of a license or authority to undertake recruitment activities,
appellant gave the impression that she has the power or ability to secure work for private
complainants in Korea. Private complainants Orlando Layoso, Donna Magboo, and Jimmy
Lejos all testified that appellant promised them work as factory workers in Korea and induced
them to pay placement fees, which included the expenses for medical examination and the
processing of their documents for work in Korea. Appellant even showed pictures of previous
applicants, whom she allegedly helped find work abroad. Appellant also explained to them the
procedure for overseas employment and promised them that she would secure their visas and
employment contracts within three months. The testimonies of Orlando Layoso, Donna
Magboo, and Jimmy Lejos were corroborated by private respondents Marcelino Lejos and
Lederle Panesa, whose Affidavits of Complaint were adopted as their direct testimonies.
This Court has held in several cases that an accused who represents to others that he could
send workers abroad for employment, even without the authority or license to do so, commits
illegal recruitment.16
Third, there are at least three victims in this case which makes appellant liable for large-scale
illegal recruitment.
Appellant denies that she gave private complainants the distinct impression that she had the
power or ability to send them abroad for work. She insists that she herself had been applying
then as a factory worker in Korea through Narcisa Santos, who had previously deployed her
as domestic helper in Hongkong. Although appellant admits having received payments from
private complainants and issuing receipts, she submits that she did so only upon the
instructions of Narcisa Santos, to whom she turned over the money collected from private
complainants.
The Court is not swayed by appellant’s contentions. As found by the trial court and the
appellate court, it was clearly established that appellant dealt directly with the private
complainants: she explained to them the procedure for overseas employment; she charged
them placement fees to cover their medical examination and the processing of their travel
documents; she issued petty cash vouchers with her signature, acknowledging receipts of
their payments; she promised the eventual release of their visas and employment contracts;
and she made them sign Trainee Agreements, purportedly their contract with their Korean
employer. Clearly, appellant, despite being a non-licensee or non-holder of authority, engaged
in recruitment activities, making her liable for illegal recruitment.
Well-settled is the rule that the trial court, having the opportunity to observe the witnesses
and their demeanor during the trial, can best assess the credibility of the witnesses and their
testimonies.17 Appellant’s mere denial cannot prevail over the positive and categorical
testimonies of the complainants.18 The trial court’s findings are accorded great respect unless
the trial court has overlooked or misconstrued some substantial facts, which if considered
might affect the result of the case.19 Furthermore, factual findings of the trial court, when
affirmed by the Court of Appeals, are deemed binding and conclusive.20
Thus, we affirm the finding of both the trial court and the appellate court that appellant is
guilty beyond reasonable doubt of illegal recruitment in large scale. However, we modify the
penalty imposed.
The penalty imposed by the trial court in this case for large-scale illegal recruitment, which
constitutes economic sabotage, is life imprisonment and a fine of ₱500,000. Section 7 of RA
8042 provides that the penalty of life imprisonment and a fine of not less than ₱500,000 nor
more than ₱1,000,000 shall be imposed if illegal recruitment constitutes economic sabotage.
Said article further provides that the maximum penalty shall be imposed if committed by a
non-licensee or non-holder of authority. Thus, the proper penalty in this case is life
imprisonment and a fine of ₱1,000,000.
Estafa
We likewise affirm appellant’s conviction for five counts of estafa under Article 315(2)(a) of
the Revised Penal Code. It is settled that a person, for the same acts, may be convicted
separately for illegal recruitment under RA 8042 (or the Labor Code), and estafa under Article
315(2)(a)21 of the Revised Penal Code.22
The elements of estafa are: (1) the accused defrauded another by abuse of confidence or by
means of deceit; and (2) the offended party or a third party suffered damage or prejudice
capable of pecuniary estimation.23 In this case, the prosecution proved beyond reasonable
doubt that appellant deceived private complainants into believing that she had the authority
and capability to send them to Korea for employment, despite her not being licensed by the
POEA to recruit workers for overseas employment. She even showed them pictures of past
applicants whom she allegedly sent abroad for work. She also assured them that she would
be able to secure their visas and employment contracts once they pay the placement fee.
Because of the assurances given by appellant, private complainants paid appellant a portion
of the agreed placement fee, for which appellant issued petty cash vouchers24 with her
signature, evidencing her receipt of the payments. Clearly, these acts of appellant constitute
estafa punishable under Article 315 (2)(a) of the Revised Penal Code.
The penalty for estafa depends on the amount defrauded. Article 315 of the Revised Penal
Code provides:
ART. 315. Swindling (estafa). – Any person who shall defraud another by any of the means
mentioned hereinbelow shall be punished by:
1st. The penalty of prision correccional in its maximum period to prision mayor in its minimum
period, if the amount of the fraud is over 12,000 pesos but does not exceed 22,000 pesos,
217
and if such amount exceeds the latter sum, the penalty provided in this paragraph shall be
imposed in its maximum period, adding one year for each additional 10,000 pesos; but the
total penalty which may be imposed shall not exceed twenty years. In such cases, and in
connection with the accessory penalties which may be imposed and for the purpose of the
other provisions of this Code, the penalty shall be termed prision mayor or reclusion temporal,
as the case may be;
xxxx
Thus, when the amount of fraud is over ₱12,000 but not exceeding ₱22,000, the penalty
imposed is prision correccional in its maximum period to prision mayor in its minimum period,
i.e., from 4 years, 2 months and 1 day to 8 years. Under the Indeterminate Sentence Law,
the minimum term shall be within the range of the penalty next lower to that prescribed by
the Revised Penal Code, which is prision correccional in its minimum to medium period. The
time included in this penalty is from 6 months and 1 day to 4 years and 2 months.
When the amount of fraud exceeds ₱22,000, the penalty shall be imposed in its maximum
period, and adding one year for every ₱10,000 in excess of ₱22,000. But, the total penalty
imposed should not exceed 20 years. The maximum term under the Indeterminate Sentence
Law is that which, in view of the attending circumstances, could be properly imposed under
the Revised Penal Code. The range of penalty under Article 315 is composed of only two
periods. To compute the maximum period of the indeterminate sentence, the total number of
years included in the two periods should be divided into three equal portions, with each portion
forming a period. Following this computation, the minimum, medium, and maximum periods
of the prescribed penalty are:
1. Minimum Period – 4 years, 2 months and 1 day to 5 years, 5 months and 10 days;
2. Medium Period – 5 years, 5 months and 11 days to 6 years, 8 months and 20 days;
3. Maximum Period – 6 years, 8 months and 21 days to 8 years.
Any incremental penalty, i.e. one year for every ₱10,000 in excess of ₱22,000, shall be added
to anywhere from6 years, 8 months and 21 days to 8 years, at the court’s discretion, provided
the total penalty does not exceed 20 years.25
We find that the penalty imposed by the trial court, and affirmed by the appellate court, is
not in accord with the penalty prescribed.1âwphi1 The trial court erroneously imposed the
minimum period of "six months of arresto mayor in its maximum." Hence, we modify the
penalty imposed on the five counts of estafa and we delete the moral damages awarded for
having no basis in law. Considering the number of victims defrauded, we find that a minimum
period of 2 years of prision correccional is appropriate.
In Criminal Case No. 02-756, where the amount defrauded is ₱15,000, and in the absence of
any mitigating or aggravating circumstance, the maximum term shall be taken from the
medium period of the penalty prescribed (i.e. 5 years, 5 months and 11 days to 6 years, 8
months and 20 days). Appellant should be sentenced to 2 years of prision correccional as
minimum to 6 years and 1 day of prision mayor as maximum.
In Criminal Case Nos. 02-757, 02-758, and 02-759, where the amount defrauded is ₱35,000
each, the maximum period (anywhere from 6 years, 8 months and 21 days to 8 years) shall
be imposed, plus the incremental penalty of one year (additional 1 year imprisonment for the
₱10,000 in excess of ₱22,000). We fix the maximum term at 7 years of prision mayor. Adding
the incremental penalty of 1 year to the maximum term, appellant should be sentenced in
each of these cases to 2 years of prision correccional as minimum to 8 years of prision mayor
as maximum.
In Criminal Case No. 02-760, where the amount defrauded is ₱20,000, appellant should be
sentenced to 2 years of prision correccional as minimum to 6 years and 1 day of prision mayor
as maximum.
Furthermore, appellant should indemnify private complainants for the amounts paid to her,
with legal interest at the rate of 6% per annum, from the time of demand, which shall be
deemed as the same day the Informations were filed against appellant, until the amounts are
fully paid.26 WHEREFORE, we AFFIRM WITH MODIFICATIONS the Decision dated 29
November 2012 of the Court of Appeals in CA-G.R. CRHC No. 04558 to read as follows:
1. In Criminal Case No. 02-755, appellant Alelie Tolentino is found GUILTY beyond reasonable
doubt of illegal recruitment in large scale, constituting economic sabotage, as defined and
penalized in Section 6 and Section 7(b) of RA 8042. She is sentenced to suffer the penalty of
life imprisonment and is ordered to pay a fine of One Million Pesos (₱1,000,000).
2. In Criminal Case No. 02-756, appellant Alelie Tolentino is found GUILTY beyond reasonable
doubt of estafa, as defined and penalized in Article 315(2)(a) of the Revised Penal Code. She
is sentenced to suffer the indeterminate penalty of 2 years of prision correccional as minimum
to 6 years and 1 day of prision mayor as maximum. She is ordered to indemnify private
complainant Lederle Panesa in the amount of Fifteen Thousand Pesos (₱15,000) as actual
damages, with legal interest of six percent (6%) per annum from 28 June 2002, until the said
amount is fully paid.
3. In Criminal Case No. 02-757, appellant Alelie Tolentino is found GUILTY beyond reasonable
doubt of estafa, as defined and penalized in Article 315(2)(a) of the Revised Penal Code. She
is sentenced to suffer the indeterminate penalty of 2 years of prision correccional as minimum
to 8 years of prision mayor as maximum. She is ordered to indemnify private complainant
Orlando Layoso in the amount of Thirty Five Thousand Pesos (₱35,000) as actual damages,
with legal interest of six percent (6%) per annum from 28 June 2002, until the said amount
is fully paid.
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4. In Criminal Case No. 02-758,appellant Alelie Tolentino is found GUILTY beyond reasonable
doubt of estafa, as defined and penalized in Article 315(2)(a) of the Revised Penal Code. She
is sentenced to suffer the indeterminate penalty of 2 years of prision correccional as minimum
to 8 years of prision mayor as maximum. She is ordered to indemnify private complainant
Donna Magboo in the amount of Thirty Five Thousand Pesos (₱35,000) as actual damages,
with legal interest of six percent (6%) per annum from 28 June 2002, until the said amount
is fully paid.
5. In Criminal Case No. 02-759, appellant Alelie Tolentino is found GUILTY beyond reasonable
doubt of estafa, as defined and penalized in Article 315(2)(a) of the Revised Penal Code. She
is sentenced to suffer the indeterminate penalty of 2 years of prision correccional as minimum
to 8 years of prision mayor as maximum. She is ordered to indemnify private complainant
Jimmy Lejos in the amount of Thirty Five Thousand Pesos (₱35,000) as actual damages, with
legal interest of six percent (6%) per annum from 28 June 2002, until the said amount is fully
paid.
6. In Criminal Case No. 02-760, appellant Alelie Tolentino is found GUILTY beyond reasonable
doubt of estafa, as defined and penalized in Article 315(2)(a) of the Revised Penal Code. She
is sentenced to suffer the indeterminate penalty of 2 years of prision correccional as minimum
to 6 years and 1 day of prision mayor as maximum. She is ordered to indemnify private
complainant Marcelino Lejos in the amount of Twenty Thousand Pesos (₱20,000) as actual
damages, with legal interest of six percent (6%) per annum from 28 June 2002, until the said
amount is fully paid.
SO ORDERED.
G.R. No. 155903 September 14, 2007
C.F. SHARP CREW MANAGEMENT, INC., petitioner,
vs.
HON. UNDERSECRETARY JOSE M. ESPANOL, JR., HON. SECRETARY LEONARDO A.
QUISUMBING and RIZAL INTERNATIONAL SHIPPING SERVICES, respondents.
DECISION
NACHURA, J.:
The petitioner C.F. Sharp Crew Management, Inc. (C.F. Sharp) appeals by certiorari the April
30, 2002 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 53747 and the November
5, 2002 Resolution2 denying its reconsideration.
In 1991, Louis Cruise Lines (LCL), a foreign corporation duly organized and existing under the
laws of Cyprus, entered into a Crewing Agreement 3 with Papadopolous Shipping, Ltd.
(PAPASHIP). PAPASHIP in turn appointed private respondent Rizal International Shipping
Services (Rizal) as manning agency in the Philippines, recruiting Filipino seamen for LCL’s
vessel.
On October 3, 1996, LCL terminated the Crewing Agreement with PAPASHIP to take effect on
December 31, 1996. It then appointed C.F. Sharp as crewing agent in the Philippines. C.F.
Sharp requested for accreditation as the new manning agency of LCL with the Philippine
Overseas Employment Administration (POEA), but Rizal objected on the ground that its
accreditation still existed and would only expire on December 31, 1996.
Pending approval of the accreditation, Theodoros Savva and Adrias Tjiakouris of LCL arrived
in the Philippines and conducted a series of interviews for seafarers at C.F. Sharp’s office.
Rizal reported LCL’s recruitment activities to the POEA on December 9, 1996, and requested
an ocular inspection of C.F. Sharp’s premises.
On December 17, 1996, POEA representatives conducted an inspection and found Savva and
Tjiakouris at C.F. Sharp interviewing and recruiting hotel staffs, cooks, and chefs for M/V
Cyprus, with scheduled deployment in January 1997. 4 The Inspection Report5 signed by
Corazon Aquino of the POEA and countersigned by Mr. Reynaldo Banawis of C.F. Sharp was
thereafter submitted to the POEA.
On January 2, 1997, Rizal filed a complaint6 for illegal recruitment, cancellation or revocation
of license, and blacklisting against LCL and C.F. Sharp with the POEA, docketed as POEA Case
No. RV-97-01-004. Then, on January 31, 1997, Rizal filed a Supplemental Complaint 7 adding
violation of Section 29 of the Labor Code of the Philippines, for designating and/or appointing
agents, representatives and employees, without prior approval from the POEA.
For its part, C.F. Sharp admitted that Savva and Tjiakouris conducted interviews at C.F.
Sharp’s office, but denied that they were for recruitment and selection purposes. According
to C.F. Sharp, the interviews were held for LCL’s ex-crew members who had various
complaints against Rizal. It belittled the inspection report of the POEA inspection team
claiming that it simply stated that interviews and recruitment were undertaken, without
reference to who were conducting the interview and for what vessels. 8 C.F. Sharp also averred
that Rizal was guilty of forum shopping, and prayed for the dismissal of the complaint on this
ground and for its lack of merit. 9
The POEA Administrator was not persuaded and found C.F. Sharp liable for illegal recruitment.
According to the Administrator, the inspection report of Ms. Aquino established that Savva
and Tjiakouris had conducted, and, at the time of the inspection, had been conducting
interviews, selection and hiring for LCL, without any authority from the POEA. The
Administrator also held that C.F. Sharp violated Section 29 of the Labor Code when it
designated officers and agents without prior approval of the POEA. 10
Thus, the Administrator disposed:
219
WHEREFORE, premises considered, the respondent CF Sharp Agency is as it is hereby ordered
suspended for a period of six (6) months or in lieu thereof, it is ordered to pay a fine of
P50,000.00 for violation of Art. 29 of the Labor Code, as amended in relation to Sec. 6(b),
Rule II, Book II of the Rules and Regulations Governing Overseas Employment in accordance
with the schedule of penalties.
Further, the respondent CF Sharp is as it is hereby ordered suspended for another period of
[eighteen] (18) months or to pay the fine of P180,000.00 for committing 9 counts of violation
of Article 29 of the Labor Code as amended in relation to Sec. 2(k), Rule I, Book VI of the
Rules and Regulations governing Overseas Employment.
The period of suspension shall be served cummulatively (sic).
The charges of violation of Sec. 6(b) of RA 8042 are hereby referred to the Anti-Illegal
Recruitment Branch for appropriate action.
SO ORDERED.11
C.F. Sharp elevated the Administrator’s ruling to the Department of Labor and Employment
(DOLE). On December 19, 1997, the then Secretary of Labor, Leonardo A. Quisumbing, 12
issued an Order,13 ruling that:
WHEREFORE, except as above MODIFIED, the Order dated March 13, 1997 of the POEA
Administrator is AFFIRMED.
Accordingly, the C.F. Sharp Crew Management, Inc. is hereby found guilty of having violated
Sec. 6, R.A. 8042 in relation to Article 13 (b) and (f), and Article 16 of the Labor Code as
amended; Rule II (jj), Book I and Sec 1 and 6, Rule I, Book II, POEA Rules and Regulations
Governing Overseas Employment, for having conspired and confederated with the [Louis]
Cruise Lines, Theodorus Savva and Andrias (sic) Tjiakouris in the recruitment of seafarers for
LCL’s ships, before it was duly accredited by POEA as the manning agency of LCL, thus a non-
holder of authority at the time. The penalty imposed against it of suspension of its license for
six (6) months or in lieu thereof, to pay a fine of Fifty Thousand Pesos (P50,000.00), is
AFFIRMED.
Further, C.F. Sharp Crew Management, Inc. is hereby found guilty of one (1) count of violation
of Art. 29 of the Labor Code in relation to Sec. 2 (k), Rule I, Book VI of the Rules and
Regulations Governing Overseas Employment, and is imposed the penalty of two (2) months
suspension of its license or in lieu thereof, to pay a fine of P20,000.00.
The penalties of suspension for both violations shall be served cumulatively.
Out of the P230,000.00 cash supersedeas bond posted by the petitioner-appellant, let the
amount of P160,000.00 be released and refunded to it, retaining P70,000.00 to be applied to
the payment of the fines as imposed above, should the petitioner opt to pay the fine instead
of undergoing suspension of its license. However, the suspension shall remain in force until
such fine is paid, or in the event that the petitioner-appellant further appeals this Order.
The charge and finding of violation of Sec. 6 (b) of R.A. 8042 are hereby referred to the Anti-
Illegal Recruitment Branch for appropriate action.
SO ORDERED.14
C.F. Sharp’s motion for reconsideration having been denied on February 5, 1999 by the then
Undersecretary, Jose M. Espanol, Jr.,15 it elevated the case to this Court on petition for
certiorari, with the case docketed as G.R. No. 137573. But, in the June 16, 1999 Resolution,
this Court referred the petition to the CA.
In the meantime, on April 15, 1999, C.F. Sharp requested the lifting of the suspension decreed
by the Secretary of Labor in his December 19, 1997 Order,16 which was granted by Deputy
Administrator for Licensing and Adjudication Valentin C. Guanio. C.F. Sharp was allowed to
deploy seafarers for its principals.
Consequently, on April 30, 2002, the CA denied C.F. Sharp’s petition for certiorari,17 holding
that C.F. Sharp was already estopped from assailing the Secretary of Labor’s ruling because
it had manifested its option to have the cash bond posted answer for the alternative fines
imposed upon it. By paying the adjudged fines, C.F. Sharp effectively executed the judgment,
having acquiesced to, and ratified the execution of the assailed Orders of the Secretary of
Labor. The CA also agreed with the POEA Administrator and the Secretary of Labor that Savva
and Tjiakouris of LCL, along with C.F. Sharp, undertook recruitment activities on December
7, 9 to 12, 1996, sans any authority. Finally, it affirmed both labor officials’ finding that C.F.
Sharp violated Article 29 of the Labor Code and Section 2(k), Rule I, Book VI of the POEA
Rules when it appointed Henry Desiderio as agent, without prior approval from the POEA.
Thus, the appellate court declared that the Secretary of Labor acted well within his discretion
in holding C.F. Sharp liable for illegal recruitment.
C.F. Sharp filed a motion for reconsideration,18 but the CA denied it on November 25, 2002.19
Hence, this appeal, positing these issues:
A. WHETHER OR NOT THE COURT OF APPEALS PATENTLY ERRED IN RULING THAT
PETITIONER IS IN ESTOPPEL IN QUESTIONING THE ORDER DATED DECEMBER 19, 1997 AND
THE RESOLUTION DATED FEBRUARY 5, 1999.
B. WHETHER OR NOT THE COURT OF APPEALS PATENTLY ERRED WHEN IT RULED THAT
PETITIONER IS LIABLE FOR VIOLATION OF SECTION 6[,] R.A. NO. 8042 IN RELATION TO
220
ARTICLE 13 (b) and (f) AND ARTICLE 66 (sic) OF THE LABOR CODE AS AMENDED; RULE II
(jj) BOOK I; AND SECTIONS 1 AND 6, RULE I, BOOK III POEA RULES AND REGULATIONS
GOVERNING OVERSEAS EMPLOYMENT.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT
PETITIONER IS LIABLE FOR VIOLATION OF ARTICLE 29 OF THE LABOR CODE, AS AMENDED,
IN RELATION TO SECTION II (k)[,] RULE I, BOOK VI OF THE RULES AND REGULATIONS
GOVERNING OVERSEAS EMPLOYMENT.20
C.F. Sharp faults the CA for ruling that petitioner is estopped from questioning the resolutions
of the Secretary of Labor. It denied that it voluntarily executed, or acquiesced to, the assailed
resolutions of the Secretary.
The general rule is that when a judgment has been satisfied, it passes beyond review,
satisfaction being the last act and the end of the proceedings, and payment or satisfaction of
the obligation thereby established produces permanent and irrevocable discharge; hence, a
judgment debtor who acquiesces to and voluntarily complies with the judgment is estopped
from taking an appeal therefrom.21
In holding C.F. Sharp in estoppel, the CA apparently relied on the April 15, 1999 Order of the
POEA, and, thus, declared:
[P]etitioner C.F. Sharp had already manifested its option to have the cash bond posted as an
answer for the alternative fines imposed in the Orders dated December 19, 1997 as stated in
the Order dated April 15, 1999 of the POEA, Adjudication Office x x x. Thus, for voluntary
execution of the Order of the Secretary of DOLE dated December 19, 1997 by paying the
adjudged fines, the petitioner was then estopped from assailing such Order before Us by way
of petition for certiorari. Where a party voluntarily executes, partially or totally a judgment or
acquiesces or ratifies the execution of the same, he is estopped from appealing therefrom. x
x x.22
The April 15, 1999 Order of Deputy Commissioner Valentin C. Guanio reads:
Respondent C.F. Sharp Crew Management, Inc., thru counsel having manifested its option to
have the cash bond posted answer for the alternative fines imposed in the above-entitled
case; the alternative suspension imposed in the Order of the Secretary dated December 19,
1997 is hereby Lifted.
SO ORDERED.23
This Order was issued in response to C.F. Sharp’s request to lift the suspension decree of the
Secretary of Labor. The request stated, viz.:
[W]e write in behalf of our client, C.F. Sharp Crew Management Inc., regarding the Advice To
Operating Units dated April 15, 1999, which arose from the Decision of the Office of the
Secretary of Labor in the case entitled C.F. Sharp Crew Management, Inc. versus Rizal
Shipping and docketed as RV 97-01-004.
In this connection, we would like to express our option to have the cash bond posted by us in
the case entitled C.F. Sharp Crew Management, Inc. versus Rizal Shipping and docketed as
RV 97-01-044 to answer for any fine that the Supreme Court may finally decide that our client
should pay in the Case entitled, C.F. Sharp Crew Management, Inc. vs. Secretary Leonardo
Quisumbing and Rizal International Shipping Services and docketed as G.R. No. 137573.
Under the circumstances, it is most respectfully requested that the aforesaid advice be
RECALLED and that a clearance be issued in favor of our client, C.F. Sharp Crew Management,
Inc.
Hoping for your immediate and favorable action on the matter.24 (Emphasis supplied)
C.F. Sharp’s letter was explicit that the cash bond posted would be answerable for any fine
that it may ultimately be held liable to pay by virtue of a final decision. In fact, on March 25,
1999, prior to the filing of the above-quoted letter-request, C.F. Sharp had already filed a
petition for certiorari assailing the Orders of the Secretary of Labor. Furthermore, there is no
showing that the assailed Order of then Secretary Quisumbing was indeed executed to
warrant the appellate court’s conclusion that C.F. Sharp was estopped from assailing the said
Order. Clearly, there is no basis for the CA to rule that C.F. Sharp voluntarily executed, or
acquiesced to, the execution of the unfavorable ruling of the Secretary of Labor.
The first issue having been settled, we now resolve whether C.F. Sharp is liable for illegal
recruitment.
C.F. Sharp denies committing illegal recruitment activities in December 1996. It posits that
the interviews undertaken by Savva and Tjiakouris do not amount to illegal recruitment under
Section 6 of Republic Act No. 8042 or the Migrants Workers Act. Further, it contends that the
interviews conducted were not for selection and recruitment purposes, but were in connection
with the seamen’s past employment with Rizal, specifically, their complaints for non-
remittance of SSS premiums, withholding of wages, illegal exactions from medical
examinations and delayed allotments. It claims that it was only upon approval of its
application for accreditation that the employment contracts were entered into and actual
deployment of the seamen was made. C.F. Sharp, thus, concludes that it cannot be held liable
for illegal recruitment.
The reasoning is specious.
Undoubtedly, in December 1996, LCL had no approved POEA license to recruit. C.F. Sharp’s
accreditation as LCL’s new manning agency was still pending approval at that time. Yet Savva
221
and Tjiakouris, along with C.F. Sharp, entertained applicants for LCL’s vessels, and conducted
preparatory interviews.
Article 13(b) of the Labor Code defines recruitment and placement as:
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring
workers, and includes referrals, contract services, promising or advertising for employment,
locally or abroad whether for profit or not: Provided, That any person or entity which in any
manner, offers or promises for a fee employment to two or more persons shall be deemed
engaged in recruitment and placement.
On the basis of this definition – and contrary to what C.F. Sharp wants to portray - the conduct
of preparatory interviews is a recruitment activity.
The fact that C.F. Sharp did not receive any payment during the interviews is of no moment.
From the language of Article 13(b), the act of recruitment may be "for profit or not." Notably,
it is the lack of the necessary license or authority, not the fact of payment, that renders the
recruitment activity of LCL unlawful.
C.F. Sharp’s claim that the interviews were not for selection and recruitment purposes does
not impress. As the Secretary of Labor aptly said:
This Office cannot conceive of a good reason why LCL/Savva/Tjiakouris should be interested
at the time in unearthing alleged violations committed by Rizal Shipping whose representative
status as manning agency was to be terminated in just a few weeks thereafter, spending
valuable time and money in the process. They stood to gain nothing from such taxing exercise
involving several hundreds of ex-crew members, which could be handled by government
agencies like the POEA, NLRC, SSS. The observation of the POEA Administrator that the
complaints of the crewmen were filed only after Rizal Shipping filed its complaints with the
POEA merely to bolster the defense of CF Sharp/LCL/Savva and Tjiakouris, is telling.
Upon the other hand, it was more to LCL’S gain to interview, select and recruit the
disembarking crewmen previously recruited by Rizal Shipping, using CF Sharp’s facilities, as
this would result in less recruitment time and cost.
Finally, the claim of Savva and Tjiakouris that Savva "talked to the POEA representative during
their visit" about these interviews and the violations which were confirmed, is just an
afterthought to support their defense; there is no entry in the Inspection Report confirming
such claim. If such claim were true, then the "able officer" of CF Sharp (LCL’s Attorney-in
fact) who signed his conformity on the 4th page of the report, and put his initial on the last
page of the report containing the handwritten findings of the inspectors on the selection and
recruitment activities of Savva and Tjiakouris, would have insisted that an entry be made
thereon about what Savva told the inspectors, or he could simply himself have written thereon
that the two LCL officials merely conducted interviews on the violations committed by Rizal
Shipping. However, the report is bereft of anything to that effect. More significant is the fact
that the inspectors, in their Memorandum dated December 11, 1996 (the very same day they
conducted the inspection), stated that they "approached said persons" (referring to Banawis,
Savva and Tjiakouris) "and told us that they were doing interview to select applicants… to
complement the crew of a passenger ship for [LOUIS] CRUISE LINES."25
Indeed, it was Savva and Tjiakouris that conducted the interviews, and undertook selection
and hiring. However, C.F. Sharp cannot steer clear of liability for it conspired with LCL in
committing illegal recruitment activities. As the Secretary of Labor had taken pains to
demonstrate:
x x x [T]here is substantial evidence on record that as alleged by Rizal Shipping, CF Sharp
conspired with LCL and its officers Savva and Tjiakouris to conduct recruitment activities in
its offices, at a time when LCL was not yet its POEA-accredited principal, in violation of Sec.
6, R.A. 8042 in relation to Article 13(b) and (f) and Article 16 of the Labor Code as amended;
Rule II(jj) Book I, and Sec. 1 and 6, Rule I, Book III, all of the POEA Rules and Regulations
Governing Overseas Employment.
Indeed, C.F. Sharp was aware of these violations when it alleged in its Petition for Review
that:
"…in any and all events, the findings relied upon by the Public Respondent show, at best, that
the parties responsible for the alleged acts of illegal recruitment are LCL and its officers alone,
or at worst, LCL and its officers, in conspiracy with petitioner. Yet, it is petitioner alone, who
is severely punished and penalized." (underscoring supplied)
xxxx
The intention, agreement and both common design of both LCL and CF Sharp to engage in
recruitment of crewmen for LCL’s ships had already been made manifest when LCL through
Savva had instructed, in the October 14, 1996 letter to disembarking crewmembers, for the
latter to report to CF Sharp for processing of their papers. This was followed by the execution
by LCL on October 17, 1996 of a Special Power of Attorney in favor of CF Sharp as new
manning agent and attorney-in-fact of LCL, with authority, among others, "to sign,
authenticate and deliver all documents necessary to complete any transaction related to the
recruitment and hiring of Filipino seamen including the necessary steps to facilitate the
departure of recruited seamen"; "to assume, on our behalf and for our account, any liability
that may arise in connection with the recruitment of seamen and/or implementation of the
employment contract of said seamen." And on November 8, 1996, CF Sharp applied for
accreditation as manning agent of LCL for the latter’s five named vessels. The discovery by
the POEA inspectors of the selection and recruitment activities undertaken by Savva and
Tjiakouris at CF Sharp’s offices on December 11, 1996, followed. The interviews by Savva and
Tjiakouris at CF Sharp’s offices on December 7, 1996 with around 300 crewmen, as sworn to
by 98 crewmen (their affidavits were submitted in evidence by CF Sharp); the interviews for
222
selection and recruitment from December 9 to 12, 1996 as found by the POEA inspectors;
and the immediate deployment of 154 crewmen for LCL right after [the] POEA approval of
accreditation of LCL as principal of CF Sharp, could not have been undertaken without the
assistance and cooperation of CF Sharp, even before such transfer of accreditation was
granted by POEA.
The petitioner-appellant must be reminded that prior to approval of the transfer of
accreditation, no recruitment or deployment may be made by the principal by itself or through
the would-be transferee manning agency, or by the latter, as this would constitute illegal
recruitment by a non-holder of authority under Sec. 6, R.A. 8042 in relation to Article 13(b)
and (f) and Article 16 of the Labor Code as amended; Rule II(jj), Book I, and Sec. 1 and 6,
Rule 1, Book III, POEA Rules and Regulations Governing Overseas Employment.
The petitioner-appellant alleges that "there is no need for a license to enable LCL’s officers to
conduct their alleged activities of interviewing, selecting and hiring crewmen. Indeed, LCL’s
officers could have conducted these activities without a license."
Such claim is without legal basis, as direct hiring by employers of Filipino workers for overseas
employment is banned; they can only do so through, among others, licensed private
recruitment and shipping/mining agencies (Art. 18, Labor Code as amended; Sec. 1, Rule 1,
Book II, POEA Rules and Regulations Governing Overseas Employment).26
We need not say more.
C.F. Sharp also denies violating Article 29 of the Labor Code. It insists that Henry Desiderio
was neither an employee nor an agent of C.F. Sharp. Yet, except for its barefaced denial, no
proof was adduced to substantiate it.
Desiderio’s name does not appear in the list of employees and officials submitted by C.F.
Sharp to the POEA. However, his name appeared as the contact person of the applicants for
the position of 2nd and 3rd assistant engineers and machinist/fitter in C.F Sharp’s
advertisement in the February 2, 1997 issue of The Bulletin Today.27
Article 29 of the Labor Code is explicit, viz.:
Art. 29. NON-TRANSFERABILITY OF LICENSE OR AUTHORITY
No license or authority shall be used directly or indirectly by any person other than the one
in whose favor it was issued or at any place other than that stated in the license or authority,
nor may such license or authority be transferred, conveyed or assigned to any other person
or entity. Any transfer of business address, appointment or designation of any agent or
representative including the establishment of additional offices anywhere shall be subject to
the prior approval of the Department of Labor. (Emphasis ours)
Thus, Section 2(k), Rule 1, Book VI of the POEA Rules Governing Overseas Employment
provides:
Section 2. Grounds for Suspension/Cancellation of License.
xxxx
k. Appointing or designating agents, representatives or employees without prior approval
from the Administration.
The appointment or designation of Desiderio as an employee or agent of C.F. Sharp, without
prior approval from the POEA, warrants administrative sanction. The CA, therefore, correctly
rejected C.F. Sharp’s posture.
Apparently, realizing the folly of its defenses, C.F. Sharp assails the admissibility of the
Memorandum and Inspection Report of the POEA. It contends that these are patently
inadmissible against C.F. Sharp for it was not given an opportunity to cross–examine the
POEA inspectors regarding the report.
The argument does not deserve even a short shrift. First, C.F. Sharp did not raise it before
the POEA and Secretary of Labor. The issue was raised for the first time in its petition for
certiorari with the CA, where the jurisdiction of the appellate court is limited to issues of
jurisdiction and grave abuse of discretion. On numerous occasions, we have made it clear
that to allow fresh issues at this stage of the proceedings is violative of fair play, justice and
due process.28
Second, jurisprudence is replete with rulings that administrative bodies are not bound by the
technical niceties of law and procedure and the rules obtaining in the courts of law.29 Hence,
whatever merit C.F. Sharp’s argument might have in the context of ordinary civil actions,
where the rules of evidence apply with greater rigidity, disappears when adduced in
connection with labor cases.
The claim of denial of due process on the part of C.F. Sharp must also be rejected. The essence
of due process lies in the reasonable opportunity afforded a party to be heard and to submit
any evidence in support of its defense. What is vital is not the opportunity to cross-examine
an adverse witness, but an opportunity to be heard.30
In this case, C.F. Sharp was given ample opportunity to be heard, to adduce evidence in
support of its version of the material occurrences, and to controvert Rizal’s allegation and the
Inspection Report. It submitted its position paper with supporting affidavits and documents,
and additionally pleaded its causes on appeal before the Secretary of Labor. Under the
circumstances, a claim of denial of due process on C.F. Sharp’s part is completely unavailing.
223
C.F. Sharp next impugns the probative value given by the Administrator and the Secretary of
Labor to the Inspection Report. It alleges that the POEA Administrator, the Labor Secretary
and the CA relied only on the Inspection Report and gave very little or no probative value to
the affidavits that it submitted in support of its claim.
C.F. Sharp would have us re-evaluate the factual veracity and probative value of the evidence
submitted in the proceedings a quo. C.F. Sharp may well be reminded that it is not our
function to review, examine, and evaluate or weigh the evidence adduced by the parties.
Elementary is the principle that this Court is not a trier of facts. Judicial review of labor cases
does not go beyond the evaluation of the sufficiency of the evidence upon which the labor
officials' findings rest. Hence, where the factual findings of the labor tribunals or agencies
conform to, and are affirmed by, the CA, the same are accorded respect and finality, and are
binding upon this Court. It is only when the findings of the labor agencies and the appellate
court are in conflict that this Court will review the records to determine which findings should
be upheld as being more in conformity with the evidentiary facts. Where the CA affirms the
labor agencies on review and there is no showing whatsoever that said findings are patently
erroneous, this Court is bound by the said findings.31
Although the rule admits of several exceptions, none of them are in point in this case. In any
event, we have carefully examined the factual findings of the CA and found the same to be
borne out of the record and sufficiently anchored on the evidence presented.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals
in CA-G.R. SP. No. 53747 are AFFIRMED.
SO ORDERED.
G.R. No. 125903 November 15, 2000
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
ROMULO SAULO, AMELIA DE LA CRUZ, and CLODUALDO DE LA CRUZ, accused.
ROMULO SAULO, accused-appellant.
DECISION
GONZAGA-REYES, J.:
Accused-appellant, together with Amelia de la Cruz and Clodualdo de la Cruz, were charged
with violation of Article 38 (b) of the Labor Code1 for illegal recruitment in large scale in an
information which states –
CRIM. CASE NO. Q-91-21911
The undersigned Assistant City Prosecutor accuses ROMULO SAULO, AMELIA DE LA CRUZ and
CLODUALDO DE LA CRUZ, of the crime of ILLEGAL RECRUITMENT IN LARGE SCALE (ART.
38(b) in relation to Art. 39(a) of the Labor Code of the Philippines, as amended by P.D. No.
2018, committed as follows:
That on or about the period comprised from April 1990 to May 1990 in Quezon City,
Philippines, and within the jurisdiction of the Honorable Court, the above-named accused,
conspiring together, confederating with and mutually helping one another, by falsely
representing themselves to have the capacity to contract, enlist and recruit workers for
employment abroad, did, then and there, wilfully, unlawfully and feloniously for a fee, recruit
and promise employment/job placement abroad to LEODEGARIO MAULLON, BENY MALIGAYA
and ANGELES JAVIER, without first securing the required license or authority from the
Department of Labor and Employment, in violation of said law.
That the crime described above is committed in large scale as the same was perpetrated
against three (3) persons individually or as [a] group penalized under Articles 38 and 39 as
amended by PD 2018 of the Labor Code (P.D. 442).
CONTRARY TO LAW.2
In addition, accused were charged with three counts of estafa (Criminal Case Nos. Q-91-
21908, Q-91-21909 and Q-91-21910). Except for the names of the complainants, the dates
of commission of the crime charged, and the amounts involved, the informations3 were
identical in their allegations –
CRIM. CASE NO. Q-91-21908
The undersigned Assistant City Prosecutor accuses ROMULO SAULO, AMELIA DE LA CRUZ AND
CLODUALDO DE LA CRUZ of the crime of ESTAFA (Art. 315, par. 2 (a) RPC), committed as
follows:
That on or about the period comprised from April 1990 to May 1990, in Quezon City,
Philippines, and within the jurisdiction of this Honorable Court, the above-named accused,
conspiring together, confederating with and mutually helping one another, with intent of gain,
by means of false pretenses and/or fraudulent acts executed prior to or simultaneously with
the commission of the fraud, did, then and there wilfully, unlawfully and feloniously defraud
one BENY MALIGAYA, in the following manner, to wit: on the date and in the place
aforementioned, accused falsely pretended to the offended party that they had connection
and capacity to deploy workers for overseas employment and that they could secure
employment/placement for said Beny Maligaya and believing said misrepresentations, the
offended party was later induced to give accused, as in fact she did give the total amount of
P35,000.00, Philippine Currency, and once in possession of the said amount and far from
complying with their commitment and despite repeated demands made upon them to return
said amount, did, then and there wilfully, unlawfully and feloniously and with intent to
224
defraud, misappropriate, misapply and convert the same to their own personal use and
benefit, to the damage and prejudice of said offended party in the aforementioned amount
and in such amount as may be awarded under the provisions of the Civil Code.
CONTRARY TO LAW.
Upon arraignment, accused-appellant pleaded not guilty to all the charges against him.
Meanwhile accused Amelia de la Cruz and Clodualdo de la Cruz have remained at large.
During trial, the prosecution sought to prove the following material facts and circumstances
surrounding the commission of the crimes:
Benny Maligaya, having learned from a relative of accused-appellant that the latter was
recruiting workers for Taiwan, went to accused-appellant’s house in San Francisco del Monte,
Quezon City, together with Angeles Javier and Amelia de la Cruz, in order to discuss her
chances for overseas employment. During that meeting which took place sometime in April
or May, 1990, accused-appellant told Maligaya that she would be able to leave for Taiwan as
a factory worker once she gave accused-appellant the fees for the processing of her
documents. Sometime in May, 1990, Maligaya also met with Amelia de la Cruz and Clodualdo
de la Cruz at their house in Baesa, Quezon City and they assured her that they were
authorized by the Philippine Overseas Employment Administration (POEA) to recruit workers
for Taiwan. Maligaya paid accused-appellant and Amelia de la Cruz the amount of P35,000.00,
which is evidenced by a receipt dated May 21, 1990 signed by accused-appellant and Amelia
de la Cruz (Exhibit A in Crim. Case No. Q-91-21908). Seeing that he had reneged on his
promise to send her to Taiwan, Maligaya filed a complaint against accused-appellant with the
POEA.4
Angeles Javier, a widow and relative by affinity of accused-appellant, was told by Ligaya,
accused-appellant’s wife, to apply for work abroad through accused-appellant. At a meeting
in accused-appellant’s Quezon City residence, Javier was told by accused-appellant that he
could get her a job in Taiwan as a factory worker and that she should give him P35,000.00
for purposes of preparing Javier’s passport. Javier gave an initial amount of P20,000.00 to
accused-appellant, but she did not ask for a receipt as she trusted him. As the overseas
employment never materialized, Javier was prompted to bring the matter before the POEA.5
On April 19, 1990, Leodigario Maullon, upon the invitation of his neighbor Araceli Sanchez,
went to accused-appellant’s house in order to discuss his prospects for gaining employment
abroad. As in the case of Maligaya and Javier, accused-appellant assured Maullon that he
could secure him a job as a factory worker in Taiwan if he paid him P30,000.00 for the
processing of his papers. Maullon paid P7,900.00 to accused-appellant’s wife, who issued a
receipt dated April 21, 1990 (Exhibit A in Crim. Case No. Q-91-21910). Thereafter, Maullon
paid an additional amount of P6,800.00 in the presence of accused-appellant and Amelia de
la Cruz, which payment is also evidenced by a receipt dated April 25, 1990 (Exhibit B in Crim.
Case No. Q-91-21910). Finally, Maullon paid P15,700.00 to a certain Loreta Tumalig, a friend
of accused-appellant, as shown by a receipt dated September 14, 1990 (Exhibit C in Crim.
Case No. Q-91-21910). Again, accused-appellant failed to deliver on the promised
employment. Maullon thus filed a complaint with the POEA.6
The prosecution also presented a certification dated July 26, 1994 issued by the POEA stating
that accused are not licensed to recruit workers for overseas employment (Exhibit A in Crim.
Case No. Q-91-21911).7
In his defense, accused-appellant claimed that he was also applying with Amelia de la Cruz
for overseas employment. He asserts that it was for this reason that he met all three
complainants as they all went together to Amelia de la Cruz’ house in Novaliches, Quezon City
sometime in May, 1990 in order to follow up their applications. Accused-appellant flatly denied
that he was an overseas employment recruiter or that he was working as an agent for one.
He also denied having received any money from any of the complainants or having signed
any of the receipts introduced by the prosecution in evidence. It is accused-appellant’s
contention that the complainants were prevailed upon by accused-appellant’s mother-in-law,
with whom he had a misunderstanding, to file the present cases against him.8
The trial court found accused-appellant guilty of three counts of estafa and of illegal
recruitment in large scale. It adjudged:
WHEREFORE, this Court finds the accused Romulo Saulo:
A. In Criminal Case No. Q-91-21908, guilty beyond reasonable doubt of Estafa under Article
315, paragraph 2(a) of the Revised Penal Code as amended, without any mitigating or
aggravating circumstances, and this Court hereby sentences the accused Romulo Saulo to
suffer the indeterminate penalty of imprisonment of three (3) years, four (4) months and one
(1) day of prision correccional as minimum to seven (7) years and one (1) day of prision
mayor as maximum, and to indemnify the complainant Beny Maligaya in the amount of
P35,000.00, with interest thereon at 12% per annum until the said amount is fully paid, with
costs against the said accused.
B. In Criminal Case No. Q-91-21909, guilty beyond reasonable doubt of Estafa under Article
315, paragraph 2(a) of the Revised Penal Code as amended, without any mitigating or
aggravating circumstances, and this Court hereby sentences the accused Romulo Saulo to
suffer the indeterminate penalty of imprisonment of two (2) years, four (4) months and one
(1) day of prision correccional as minimum to six (6) years and one (1) day of prision mayor
as maximum, and to indemnify the complainant Angeles Javier in the amount of P20,000.00
with interest thereon at 12% per annum until the said amount is fully paid, with costs against
said accused.
C. In Criminal Case No. Q-91-21910, guilty beyond reasonable doubt of Estafa under Article
315, paragraph 2(a) of the Revised Penal Code as amended, without any mitigating or
aggravating circumstances, and this Court hereby sentences the accused Romulo Saulo to
225
suffer the indeterminate penalty of imprisonment of two (2) years, four (4) months and one
(1) day of prision correccional as minimum to six (6) years and one (1) day of prision mayor
as maximum, and to indemnify the complainant Leodigario Maullon in the amount of
P30,400.00 with interest thereon at 12% per annum until the said amount is fully paid, with
costs against said accused.
D. In Criminal Case No. Q-91-21911, guilty beyond reasonable doubt of Illegal Recruitment
in Large Scale as defined and punished under Article 38 (b) in relation to Article 39 (a) of the
Labor Code of the Philippines as amended, and this Court sentences the accused Romulo
Saulo to suffer the penalty of life imprisonment and to pay a fine of One Hundred Thousand
Pesos (P100,000.00).
Being a detention prisoner, the accused Romulo Saulo shall be entitled to the benefits of
Article 29 of the Revised Penal Code as amended.
SO ORDERED.9
The Court finds no merit in the instant appeal.
The essential elements of illegal recruitment in large scale, as defined in Art. 38 (b) of the
Labor Code and penalized under Art. 39 of the same Code, are as follows:
(1) the accused engages in the recruitment and placement of workers, as defined under Article
13 (b) or in any prohibited activities under Article 34 of the Labor Code;
(2) accused has not complied with the guidelines issued by the Secretary of Labor and
Employment, particularly with respect to the securing of a license or an authority to recruit
and deploy workers, whether locally or overseas; and
(3) accused commits the same against three (3) or more persons, individually or as a
group.10
Under Art. 13 (b) of the Labor Code, recruitment and placement refers to "any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and
includes referrals, contract services, promising or advertising for employment, locally or
abroad, whether for profit or not; Provided, That any person or entity which, in any manner,
offers or promises for a fee employment to two or more persons shall be deemed engaged in
recruitment and placement."
After a careful and circumspect review of the records, the Court finds that the trial court was
justified in holding that accused-appellant was engaged in unlawful recruitment and
placement activities. The prosecution clearly established that accused-appellant promised the
three complainants - Benny Maligaya, Angeles Javier and Leodigario Maullon – employment
in Taiwan as factory workers and that he asked them for money in order to process their
papers and procure their passports. Relying completely upon such representations,
complainants entrusted their hard-earned money to accused-appellant in exchange for what
they would later discover to be a vain hope of obtaining employment abroad. It is not disputed
that accused-appellant is not authorized11 nor licensed12 by the Department of Labor and
Employment to engage in recruitment and placement activities. The absence of the necessary
license or authority renders all of accused-appellant’s recruitment activities criminal.
Accused-appellant interposes a denial in his defense, claiming that he never received any
money from the complainants nor processed their papers. Instead, accused-appellant insists
that he was merely a co-applicant of the complainants and similarly deceived by the schemes
of Amelia and Clodualdo de la Cruz. He contends that the fact that Benny Maligaya and
Angleles Javier went to the house of Amelia and Clodualdo de la Cruz in Novaliches, Quezon
City, to get back their money and to follow-up their application proves that complainants knew
that it was the de la Cruz’ who received the processing fees, and not accused-appellant.
Further, accused-appellant argues that complainants could not have honestly believed that
he could get them their passports since they did not give him any of the necessary documents,
such as their birth certificate, baptismal certificate, NBI clearance, and marriage contract.
Accused-appellant’s asseverations are self-serving and uncorroborated by clear and
convincing evidence. They cannot stand against the straightforward and explicit testimonies
of the complainants, who have identified accused-appellant as the person who enticed them
to part with their money upon his representation that he had the capability of obtaining
employment for them abroad. In the absence of any evidence that the prosecution witnesses
were motivated by improper motives, the trial court’s assessment of the credibility of the
witnesses shall not be interfered with by this Court.13
The fact that accused-appellant did not sign all the receipts issued to complainants does not
weaken the case of the prosecution. A person charged with illegal recruitment may be
convicted on the strength of the testimonies of the complainants, if found to be credible and
convincing.14 The absence of receipts to evidence payment does not warrant an acquittal of
the accused, and it is not necessarily fatal to the prosecution’s cause.15
Accused-appellant contends that he could not have committed the crime of illegal recruitment
in large scale since Nancy Avelino, a labor and employment officer at the POEA, testified that
licenses for recruitment and placement are issued only to corporations and not to natural
persons. This argument is specious and illogical. The Labor Code states that "any person or
entity which, in any manner, offers or promises for a fee employment to two or more persons
shall be deemed engaged in recruitment and placement."16 Corrolarily, a nonlicensee or
nonholder of authority is any person, corporation or entity which has not been issued a valid
license or authority to engage in recruitment and placement by the Secretary of Labor, or
whose license or authority has been suspended, revoked, or canceled by the POEA or the
Secretary.17 It also bears stressing that agents or representatives appointed by a licensee or
a holder of authority but whose appointments are not previously authorized by the POEA fall
226
within the meaning of the term nonlicensee or nonholder of authority.18 Thus, any person,
whether natural or juridical, that engages in recruitment activities without the necessary
license or authority shall be penalized under Art. 39 of the Labor Code.
It is well established in jurisprudence that a person may be charged and convicted for both
illegal recruitment and estafa. The reason for this is that illegal recruitment is a malum
prohibitum, whereas estafa is malum in se, meaning that the criminal intent of the accused
is not necessary for conviction in the former, but is required in the latter.19
The elements of estafa under Art. 315, paragraph 2 (a), of the Revised Penal Code are: (1)
that the accused has defrauded another by abuse of confidence or by deceit, and (2) that
damage or prejudice capable of pecuniary estimation is caused to the offended party or third
person.20 The trial court was correct in holding accused-appellant liable for estafa in the case
at bench. Owing to accused-appellant’s false assurances that he could provide them with work
in another country, complainants parted with their money, to their damage and prejudice,
since the promised employment never materialized.
Under Art. 315 of the Revised Penal Code, the penalty for the crime of estafa is as follows:
1st. The penalty of prision correccional in its maximum period to prision mayor in its minimum
period, if the amount of the fraud is over 12,000 pesos but does not exceed 22,000 pesos,
and if such amount exceeds the latter sum, the penalty provided in this paragraph shall be
imposed in its maximum period, adding one year for each additional 10,000 pesos; but the
total penalty which may be imposed shall not exceed twenty years. In such cases, and in
connection with the accessory penalties which may be imposed under the provisions of this
Code, the penalty shall be termed prision mayor or reclusion temporal, as the case may be.
xxx xxx xxx
Under the Indeterminate Sentence Law, the maximum term of the penalty shall be that which,
in view of the attending circumstances, could be properly imposed under the Revised Penal
Code, and the minimum shall be within the range of the penalty next lower to that prescribed
for the offense. Since the penalty prescribed by law for the estafa charge against accused-
appellant is prision correccional maximum to prision mayor minimum, the penalty next lower
in degree is prision correccional minimum to medium. Thus, the minimum term of the
indeterminate sentence should be anywhere within six (6) months and one (1) day to four
(4) years and two (2) months.
In fixing the maximum term, the prescribed penalty of prision correccional maximum to
prision mayor minimum should be divided into three equal portions of time, each of which
portion shall be deemed to form one period, as follows –
Minimum Period : From 4 years, 2 months and 1 day to 5 years, 5 months and 10 days
Medium Period : From 5 years, 5 months and 11 days to 6 years, 8 months and 20 days
Maximum Period : From 6 years, 8 months and 21 days to 8 years
pursuant to Article 65, in relation to Article 64, of the Revised Penal Code.
When the amounts involved in the offense exceeds P22,000, the penalty prescribed in Article
315 of the Revised Penal Code shall be imposed in its maximum period, adding one year for
each additional P10,000.00, although the total penalty which may be imposed shall not exceed
twenty (20) years.21
Accordingly, the following penalties shall be imposed upon accused-appellant:
In Criminal Case No. Q-91-21908 where accused-appellant defrauded Benny Maligaya in the
amount of P35,000.00, one year for the additional amount of P13,000.00 in excess of
P22,000.00 provided for in Article 315 shall be added to the maximum period of the prescribed
penalty of prision correccional maximum to prision mayor minimum. Thus, accused-appellant
shall suffer the indeterminate penalty of four (4) years, and two (2) months of prision
correccional medium, as minimum to nine (9) years of prision mayor as maximum.22
Accused-appellant shall also pay Benny Maligaya P35,000.00 by way of actual damages.
In Criminal Case No. Q-91-21909 where accused-appellant defrauded Angeles Javier in the
amount of P20,000.00, accused-appellant shall suffer the indeterminate penalty of one (1)
year, eight (8) months and twenty-one (21) days of prision correccional minimum to five (5)
years, five (5) months and eleven (11) days of prision correccional maximum. Accused-
appellant shall also pay Angeles Javier P20,000.00 by way of actual damages.
In Criminal Case No. Q-91-21910 where accused-appellant defrauded Leodigario Maullon in
the amount of P30,400.00, accused-appellant shall suffer the indeterminate penalty of four
(4) years and two (2) months of prision correccional medium, as minimum to eight (8) years
of prision mayor, as maximum.23 Accused-appellant shall also pay Leodigario Maullon
P30,400.00 by way of actual damages.
In addition, for the crime of illegal recruitment in large scale (Criminal Case No. Q-91-21911)
and pursuant to Article 39 (a) of the Labor Code, accused-appellant shall suffer the penalty
of life imprisonment and a fine of One Hundred Thousand Pesos (P100,000.00).
WHEREFORE, the March 6, 1996 Decision of the trial court finding accused-appellant guilty
beyond reasonable doubt of the crime of illegal recruitment in large scale and estafa is hereby
AFFIRMED subject to the following modifications:
In Criminal Case No. Q-91-21908 where accused-appellant defrauded Benny Maligaya in the
amount of P35,000.00, one year for the additional amount of P13,000.00 in excess of
227
P22,000.00 provided for in Article 315 shall be added to the maximum period of the prescribed
penalty of prision correccional maximum to prision mayor minimum. Thus, accused-appellant
shall suffer the indeterminate penalty of four (4) years, and two (2) months of prision
correccional medium, as minimum to nine (9) years of prision mayor as maximum. Accused-
appellant shall also pay Benny Maligaya P35,000.00 by way of actual damages.1âwphi1
In Criminal Case No. Q-91-21909 where accused-appellant defrauded Angeles Javier in the
amount of P20,000.00, accused-appellant shall suffer the indeterminate penalty of one (1)
year, eight (8) months and twenty-one (21) days of prision correccional minimum to five (5)
years, five (5) months and eleven (11) days of prision correccional maximum. Accused-
appellant shall also pay Angeles Javier P20,000.00 by way of actual damages.
In Criminal Case No. Q-91-21910 where accused-appellant defrauded Leodigario Maullon in
the amount of P30,400.00, accused-appellant shall suffer the indeterminate penalty of four
(4) years and two (2) months of prision correccional medium, as minimum to eight (8) years
of prision mayor, as maximum. Accused-appellant shall also pay Leodigario Maullon
P30,400.00 by way of actual damages.
In addition, for the crime of illegal recruitment in large scale (Criminal Case No. Q-91-21911)
and pursuant to Article 39 (a) of the Labor Code, accused-appellant shall suffer the penalty
of life imprisonment and a fine of One Hundred Thousand Pesos (P100,000.00).
Costs against accused-appellant.
SO ORDERED.
G.R. No. 124439 February 5, 2004
PEOPLE OF THE PHILIPPINES, appellee
vs.
FLOR GUTIERREZ Y TIMOD, appellant.
DECISION
TlNGA, J.:
In its decision dated 22 March 1996, the Regional Trial Court (RTC) of Pasay City, Branch
1081 found accused Flor Gutierrez y Timod guilty beyond reasonable doubt of Illegal
Recruitment in Large Scale and sentenced her to suffer the penalty of life imprisonment and
to pay a fine of P100,000.00.
The Information in Criminal Case No. 95-6796 reads as follows:
That from the months of April to August 1994 in Pasay City, Philippines, and within the
jurisdiction of this Honorable Court, accused FLOR GUTIERREZ Y TIMOD conspiring and
confederating with CECILIA BAUTISTA, ESTHER GAMILDE, LINDA RABAINO and MARILYN
GARCIA (whose present whereabouts are unknown) and mutually helping one another, acting
in common accord, did then and there, willfully, unlawfully and feloniously, engage in
recruitment activities for overseas job placement and actually contract, enlist and recruit
EVELYN V. RAMOS, ROSEMARIE I. TUGADE, GENEROSA G. ASUNCION and ROSALYN B.
SUMAYO as domestic helpers in Dubai, United Arab Emirates, for a fee of various amounts
ranging from P10,000.00 to P15,000.00 each, without first obtaining the required license
and/or authority from the Philippine Overseas Employment Administration (POEA).
CONTRARY TO LAW.2
Arraigned on April 24, 1995, the accused entered a plea of not guilty. The version of the
prosecution is as follows:
On April 18, 1994, Rosemarie Tugade went to the house of one Celia Bautista, a "recruiter-
agent" of the accused, at Brgy. Bulala, Vigan, Ilocos Sur. 3 Celia told Rosemarie that she had
to submit the following requirements for her application to work in Dubai as a domestic helper:
P4,000.00 as placement fee, P1,200.00 for passport, P850.00 for "medical," six (6) 2x2
pictures and her original birth certificate.4
The next day, Rosemarie, together with "recruiter-agent" Celia Bautista and fellow applicant
Evelyn Ramos, traveled to Manila to the house of one Esther Gamilde, another of the accused's
"recruiter-agents."5 There, Rosemarie and Evelyn filled out their bio-data forms. The two then
underwent a medical examination before having their whole-body picture taken. Esther told
them that they would know the results of their application from Celia.6
Two weeks later, Celia told Rosemarie that her application for Dubai was already approved
and that she will be receiving $150.00-dollars per month. For the first three (3) months,
however, there will be salary deductions.7
On August 27, 1994, Rosemarie and Evelyn, along with Celia and Esther, went to the
accused's office at Sarifudin Manpower and General Services at EDSA Extension, Pasay City. 8
The accused told Rosemarie that she needed to pay P2,000.00 more. 9 The accused said she
had received all of Rosemarie's documents and the money paid to Celia.10 Trusting in Celia,
Rosemarie did not demand a receipt from the accused.
On August 31, 1994, the accused asked Rosemarie to give P500.00 as terminal fee for her
departure in a week's time.11 Rosemarie paid the amount, as evidenced by a receipt.12 The
scheduled departure did not push through, however. Instead, Rosemarie was told that she
was to leave on September 15, 1994, but, again, this did not materialize. 13 A series of
postponements followed until finally she was told that she would be leaving before Christmas
1994. Almost predictably, her trip never came to pass.14
228
Private complainant Evelyn Ramos was with Rosemarie when she went to Celia Bautista's
house on April 19, 1994.15 Celia told Evelyn that for P4,000.00 she could leave for Dubai to
work as a domestic helper.16 Like Rosemarie, Evelyn gave all her documents and paid the
fees to Celia, who in turn handed them to Esther Gamilde in Tondo. 17 On June 10, 1994,
Ramos gave Bautista P8,000.00, which was also turned over to Gamilde.18
On August 22, 1994, Celia told Evelyn that she only had to wait one more week before she
left for Dubai.19 On August 27, 1994, Esther brought Evelyn to the accused's office, 20 where
the accused asked for an additional P2,000.00 as processing fee for the Philippine Overseas
Employment Agency (POEA).21 Evelyn paid the amount on August 31, 1994,22 including a
terminal fee of P500.00. Like Rosemarie, Evelyn was not able to leave the country despite the
accused's promises.
Another complainant, Rosalyn D. Sumayo, also applied for overseas job placement as a
domestic helper in Dubai. Her experience was more agonizing. In her case, it was one Marilyn
Garcia who assisted Rosalyn.23 She submitted a copy of her birth certificate, six (6) copies of
2 x 2 pictures, two (2) copies of her whole-body picture, passport, and medical certificate.24
Marilyn also asked Rosalyn to pay: a processing fee of P7,500.00, P2,620.00 as full tax,
P500.00 as terminal fee, and P3,000.00 as service charge.25
All the documents and money given by Rosalyn to Marilyn were subsequently remitted to the
accused at her office on June 28, 1994.26 The accused told Rosalyn that she would be leaving
anytime, but after three months, Rosalyn's departure did not push through.27
Despite the setback, the accused kept assuring Rosalyn that she would still be able to leave. 28
One time, the accused brought her to the airport and instructed her to hide in the airport
restroom.29 After fifteen minutes, the accused told her that they had to leave the airport
because "mahigpit sa immigration."30 On another occasion, the accused directed Rosalyn to
hide inside the Kayumanggi Restaurant for fifteen (15) minutes. 31 Nothing happened after,
though, and they went home.
On November 14, 1994, Rosalyn was again at the airport.32 The accused warned her, though,
that if the Immigration Officer insisted on seeing her papers, it would be better for her to
leave.33 As directed, she left the airport when she was asked to produce her documents.34
Exasperated, Rosalyn went to the accused's house and demanded the return of her money
and her documents. Instead of acceding to Rosalyn's demands, the accused shouted at her
and warned her that she had to pay a cancellation fee of $300.00.35 Rosalyn was not able to
give the amount so she stayed with the accused, who assured her that she would still be able
to leave the country and that she would receive a monthly salary of $150 to $200. 36 These
promises were never fulfilled. Rosalyn thus went to the POEA, where POEA Administrator
Felicisimo Joson, Jr. informed her that the accused did not have a license to recruit. 37
Generosa Asuncion suffered the same fate as her co-applicants. In August 1994, she applied
for overseas job placement with one Linda Rabaino.38 Generosa submitted her passport,
medical certificate, clearance from the National Bureau of Investigation (NBI), birth
certificate, bio-data and pictures.39 She also paid P15,000.00 in two installments on
September 9 and 12, 1994,40 which payments were not receipted.
Linda told Generosa she would be leaving on September 13, 1994. 41 However, she was not
able to leave because, according to Linda, at 25, Generosa was under-aged.42
Linda then referred Generosa to the accused in the latter's office, where Linda turned over
Generosa's documents as well as the P15,000 00 to the accused. 43 The accused promised that
Linda would be able to leave, but her departure never took place.44 When Generosa demanded
the return of her money and her documents, the accused told her that she had to pay a
cancellation fee of $600.00.45 Stunned, Linda just opted to await the further outcome of her
application.46 Her waiting was all for naught.
With the promises of jobs abroad unfulfilled, complainants decided to verify if the accused
was a licensed recruiter. Upon learning from the POEA that she was not so licensed, 47 they
proceeded to the Philippine Anti-Crime Commission (PACC) to execute their respective
affidavits.48
SPO4 Johnny Marqueta investigated the women's complaint. He confirmed with the POEA that
the accused was not licensed or authorized to recruit overseas contract workers. 49 The four
complainants also informed him that the accused wanted to meet with the group on January
26, 1995.50 SPO4 Marqueta thus had their money, totaling P2,000.00,51 marked at the
National Bureau of Investigation (NBI) Forensic Section for their entrapment operation. 52
On January 26, 1995, the accused met with the four complainants at Jollibee, Commonwealth
Avenue, Quezon City. As soon as she finished counting the marked money and wrapping it in
Jollibee napkins, the accused was arrested.53
In her defense, the accused claimed that as an "employee" of a duly licensed agency who was
tasked to recruit and offer job placements abroad, she could not be held liable for illegal
recruitment.54 She admitted that she had no authority to recruit in her personal capacity, 55
but that her authority emanated from a Special Power of Attorney (SPA) and a Certification
issued by a licensed agency.56
At the time complainants applied for overseas employment, the accused was "employed" as
a Marketing Directress of Sarifudin Manpower and General Services,57 a duly licensed agency
with License No. OS-91-LB-61193-NL issued by the Department of Labor and Employment.58
A Special Power of Attorney (SPA) from Sarifudin, dated May 1, 1994, 59 states that she was
authorized:
229
1. To negotiate, enter into business transactions for manpower supply particularly in the
Middle East countries;
2. For and in behalf of SARIFUDIN, MANPOWER AND GENERAL SERVICES using as guidelines
and terms and conditions by both parties to secure:
(a) Verified Job Orders;
(b) Special Power of Attorney;
(c) Copy of Certified Certificate of Business Registration;
(d) VISA Authorization and/or NOC VISA.
....60
A Certification61 dated February 3, 1995, issued by the same agency, also states that: "MRS.
FLOR T. GUTIERREZ was (sic) employed as OVERSEAS MARKETING DIRECTRESS of
SARIFUDIN MANPOWER AND GENERAL SERVICES, effective May 1994, up to the present"62
The defense also submitted several documents to prove compliance with the requirements of
the agency for her to assume her duties under the SPA. These include receipts 63 for a cash
bond in the amount of P30,000.00 that she paid in several installments. She also paid a
royalty fee of P4,000.0064 and an office rental fee of P3,000.00. 65
The accused was also required by the agency to submit a monthly report for June 1994, as
evidenced by a Memorandum signed by the General Manager, Leah Salud.66 She submitted
said monthly report, indeed, several monthly reports. 67 A document calling on all Marketing
Directresses/Directors to attend a meeting on July 8, 1994, was also presented. 68
The accused did not receive any salary or allowances from Sarifudin but received commissions
from the agency's principals, the employers from foreign countries (ten in the Middle East and
two in Singapore) at the rate of U.S. $100.00 per person. 69 From her commissions, she paid
rent and royalty to Sarifudin.70
Edwin Cristobal, POEA Labor Employment Officer, confirmed that Sarifudin was duly licensed
to engage in recruitment activities.71 He presented a Certification issued by Ma. Salome S.
Mendoza, Manager of the Licensing Branch72 and containing the list of officers and staff of
Sarifudin. On said list appear the names "Florna Gutierrez" and "Flor Gutierrez," 73 apparently,
one and the same person.74 In the same Certification, appears the following:
It is further certified that the said agency revoked the appointment of Ms. Flor Gutierrez as
Overseas Mktg. Director/Manager in a letter dated Dec. 15, 1995, although this Office has not
received nor acknowledged the representation of Ms. Gutierrez.75
Cristobal explained that the POEA, "Never had a letter from Sarifudin registering or
authorizing Flor Gutierrez... rather, [what] we received [was a] revocation of her
appointment."76 He also revealed that the name of the accused does not appear in the records
of the POEA as being employed by the agency from the assumption of its license on June 11,
1993, up to its termination on June 11, 1995. 77
The defense likewise alleged that complainants Rosemarie Tugade and Evelyn Ramos
executed Affidavits of Desistance dated May 12, 1995,78 stating that the accused had returned
to them the amounts they paid her and that the complaint was a result of a misunderstanding.
On March 22, 1996, the trial court rendered its Decision finding the accused guilty beyond
reasonable doubt of Illegal Recruitment in Large Scale:
WHEREFORE, after evaluating all the foregoing, the accused FLOR GUTIERREZ is hereby found
guilty beyond reasonable doubt of Illegal Recruitment in Large Scale, and judgment is hereby
rendered as follows:
(a) Convicting the accused of Illegal Recruitment in Large Scale and sentencing her to suffer
the penalty of life imprisonment and payment of P100,000.00 fine;
(b) No reimbursement to complainants is needed since their money have already been
returned;
(c) Accused to pay moral damages in the amount of P50,000.00 to each complainant;
(d) Accused to pay exemplary damages in the amount of P50,000.00 to each complainant;
and
(e) To pay the costs of the suit.79
Accused Flor Gutierrez filed the present appeal seeking the reversal of her conviction.
Illegal recruitment is committed when two elements concur, namely: (1) the offender has no
valid license or authority required by law to enable one to lawfully engage in recruitment and
placement of workers; and (2) he undertakes either any activity within the meaning of
"recruitment and placement" defined under Art. 13(b), or any of the prohibited practices
enumerated under Art. 34 of the Labor Code.80 Art. 13(b) of the Labor Code defines
"recruitment and placement" as "any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring workers, and includes referrals, contract services, promising or
230
advertising for employment, locally or abroad, whether for profit or not: Provided, That any
person or entity which, in any manner, offers or promises for a fee employment to two or
more persons, shall be deemed engaged in recruitment and placement." 81
The crime becomes Illegal Recruitment in Large Scale when the two elements concur, with
the addition of a third element: the recruiter committed the same against three or more
persons, individually or as a group.82
Appellant argues that as a representative of a duly licensed recruitment agency, she cannot
be held guilty of Illegal Recruitment in Large Scale. We disagree.
Section 11, Rule II, Book II of the Rules and Regulations Governing Overseas Employment
requires the prior approval of the POEA of the appointment of representatives or agents:
Section 11. Appointment of Representatives. Every appointment of representatives or
agents of licensed agency shall be subject to prior approval or authority of the Administration.
The approval may be issued upon submission of or compliance with the following
requirements:
a. Proposed appointment or Special Power of Attorney;
b. Clearances of the proposed representative or agent from NBI;
c. A sworn or verified statement by the designating or appointing person or company
assuming full responsibility for all the acts of the agent or representative done in connection
with the recruitment and placement of workers.
Approval by the Administration of the appointment or designation does not authorize the
agent or representative to establish a branch or extension office of the licensed agency
represented.
Any revocation or amendment in the appointment should be communicated to the
administration. Otherwise, the designation or appointment shall be deemed as not revoked
or amended.
Section 1, Rule X of the same Book, in turn, provides that "recruitment and placement
activities of agents or representatives appointed by a licensee, whose appointments were not
authorized by the Administration shall likewise constitute illegal recruitment."
The Certification from the POEA that it "has not received nor acknowledged the representation
of Ms. Gutierrez" establishes that the appointment of appellant by Serafudin as a
representative or agent was not authorized by the POEA. It may be true that the POEA
received from Serafudin a revocation of appellant's appointment, but still is of no consequence
since Serafudin in the first place did not submit her appointment to the POEA, and so the
POEA has nothing to approve.
As found by the trial court83 the evidence on record, notably appellant's own version, indicates
that she was running her own labor recruitment business.
Appellant cannot escape liability by claiming that she was not aware that before working for
her employer in the recruitment agency, she should first be registered with the POEA. 84 Illegal
recruitment in large scale is malum prohibitum, not malum in se.85 Good faith is not a defense.
That appellant engaged in recruitment and placement is beyond dispute. The complaining
witnesses categorically testified that the accused promised them on several occasions that
they would be leaving for work abroad. Appellant received complainants' money and
documents, a fact that the complainants themselves witnessed and which the accused
acknowledged when she returned the same to them after the filing of the case against her.
Appellant even brought complainant Rosalyn Sumayo to the airport three times, raising her
expectations, but leaving her hanging in mid-air. The accused even had the audacity to
demand cancellation fees from the complainants when they asked for a refund.
The Affidavits of Desistance executed by two of the complainants deserve little weight. The
Court attaches no persuasive value to affidavits of desistance, especially when executed as
an afterthought. As held in the case of People v. Ubina,86 "it would be a dangerous rule for
courts to reject testimonies solemnly taken before the courts of justice simply because the
witnesses who had given them later on changed their mind for one reason or another; for
such rule would make solemn trials a mockery and place the investigation of truth at the
mercy of unscrupulous witnesses."87
As appellant committed illegal recruitment against three or more persons, she is liable for
Illegal Recruitment in Large Scale.
WHEREFORE, the Decision of the Regional Trial Court, finding appellant Flor Gutierrez y Timod
guilty beyond reasonable doubt of the crime of Illegal Recruitment in Large Scale and
sentencing her to life imprisonment and to pay a fine of P100,000.00 is AFFIRMED.
SO ORDERED.
G.R. Nos. 140067-71 August 29, 2002
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
NENITA MARIA OLIVIA GALLARDO (at large), and REMEDIOS MALAPIT, accused,
REMEDIOS MALAPIT, accused-appellant.
231
DECISION
YNARES-SANTIAGO, J.:
Remedios Malapit and Nenita Maria Olivia Gallardo were charged with one (1) count of illegal
recruitment committed in large-scale, three (3) counts of estafa, and one (1) count of simple
illegal recruitment before the Regional Trial Court of Baguio City, Branch 3.1 The Informations
read as follows:
Criminal Case No. 15320-R (Illegal Recruitment Committed in Large Scale)2
The undersigned (Public Prosecutor) accuses NENITA MARIA OLIVIA GALLARDO and
REMEDIOS MALAPIT of the crime of ILLEGAL RECRUITMENT COMMITTED IN LARGE SCALE,
defined and penalized under Article 13(b) in relation to Article 38(b), 34, and 39 of P.D. No.
442, otherwise known as the New Labor Code of the Philippines, as amended by P.D. No.
1693, 1920, 2018 and R.A. No. 8042, committed as follows:
That during the period from January 1997 to June, 1997, in the City of Baguio, Philippines,
and within the jurisdiction of this Honorable Court, the above-named accused, conspiring,
confederating and mutually aiding one another, did then and there willfully, unlawfully and
feloniously for a fee, recruit and promise employment as contract workers in Canada, to the
herein complainants, namely: Rommel Suni, Myrna Castro, Marilyn Mariano, Bryna Paul
Wong, Mary Grace Lanozo, Ana Liza Aquino, Marie Purificacion Abenoja, Florence Bacoco and
Lorna Domingo, without said accused having first secured the necessary license or authority
from the Department of Labor and Employment.
Criminal Case No. 15323-R (Estafa)3
That in March 1997 in the City of Baguio, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, conspiring, confederating and mutually aiding
one another did then and there willfully, unlawfully and feloniously defraud one MARILYN
MARIANO by way of false pretenses, which are executed prior to or simultaneously with the
commission of the fraud, as follows; to wit: the accused knowing fully well that he/she they
is/are not authorized job recruiters for persons intending to secure work abroad convinced
said Marilyn Mariano and pretended that he/she/they could secure a job for him/her abroad,
for and in consideration of the sum of P36,500.00, when in truth and in fact they could not;
the said Marilyn Mariano deceived and convinced by the false pretenses employed by the
accused parted away the total sum of P36,500.00, in favor of the accused, to the damage
and prejudice of the said Marilyn Mariano in the aforementioned amount of THIRTY SIX
THOUSAND FIVE HUNDRED PESOS (P36,500.00), Philippine Currency.
Criminal Case No. 15327-R (Estafa)4
That on June 6, 1997 in the City of Baguio, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, conspiring, confederating and mutually aiding
one another, did then and there willfully, unlawfully and feloniously defraud one MARIE
PURIFICACION ABENOJA by way of false pretenses, which are executed prior to or
simultaneously with the commission of the fraud, as follows, to wit: the accused knowing fully
well that he/she they is/are not authorized job recruiters for persons intending to secure work
abroad convinced said Marie Purificacion Abenoja and pretended that he/she/they could
secure a job for him/her abroad, for and in consideration of the sum of P36,500.00, when in
truth and in fact they could not; the said Marie Purificacion Abenoja deceived and convinced
by the false pretenses employed by the accused parted away the total sum of P36,500.00 in
favor of the accused, to the damage and prejudice of the said Marie Purificacion Abenoja in
the aforementioned amount of THIRTY SIX THOUSAND FIVE HUNDRED PESOS (P36,500.00),
Philippine currency.
Criminal Case No. 15570-R (Illegal Recruitment)5
The under signed (Public Prosecutor) accuses NENITA MARIA OLIVIA-GALLARDO and
REMEDIOS MALAPIT of the crime of ILLEGAL RECRUITMENT, defined and penalized under
Article 13(b) in relation to Article 38(b), 34, and 39 of Presidential Decree No. 442, otherwise
known as the New Labor Code of the Philippines, as amended by R.A. No. 8042, committed
as follows:
That on or about the 6th day of June, 1997, in the City of Baguio, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, conspiring, confederating and
mutually aiding one another, did then and there willfully, unlawfully and feloniously for a fee,
recruit and promise employment as contract worker in Canada, to the herein complainant
ARACELI D. ABENOJA, without said accused having first secured the necessary license or
authority from the Department of Labor and Employment.
Criminal Case No. 15571-R (Estafa)6
That on or about the 11th day of June, 1997 in the City of Baguio, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, conspiring, confederating &
mutually aiding one another, did then and there willfully, unlawfully and feloniously defraud
one ARACELI D. ABENOJA by way of false pretenses, which are executed prior to or
simultaneously with the commission of the fraud, as follows; to wit: the accused knowing fully
well that he/she/they is/are not authorized job recruiters for persons intending to secure work
abroad convinced said Araceli D. Abenoja and pretended that he/she/they could secure a job
for him/her abroad, for and in consideration of the sum of P35,000.00, when in truth and in
fact they could not; the said Araceli D. Abenoja deceived and convinced by the false pretenses
employed by the accused parted away the total sum of P35,000.00 in favor of the accused,
to the damage and prejudice of the said Araceli D. Abenoja in the aforementioned amount of
THIRTY FIVE THOUSAND PESOS (P35,000.00), Philippine currency.
232
Only accused-appellant Remedios Malapit was brought to the jurisdiction of the trial court.
Her co-accused, Nenita Maria Olivia Gallardo, remained at large.
Upon arraignment, accused-appellant pleaded "not guilty" to all charges. The five (5) cases
were consolidated and tried jointly.
Marie Purificacion Abenoja and Marilyn Mariano met accused-appellant at her beauty parlor
in Lopez Building, Session Road, Baguio City. Marie met accused-appellant sometime in
January 1997 through her friend, Florence Bacoco. A month later, Marilyn was introduced to
accused-appellant by Grace Lanozo, a fellow nurse at the PMA Hospital.
Marie claims that accused-appellant enticed her to apply for work as a caregiver in Canada.
Accused-appellant showed her a piece of paper containing a job order saying that Canada was
in need of ten (10) caregivers and some messengers. Accused-appellant also promised her
that she will be receiving a salary of CN$2,700.00 (Canadian Dollars) and will be able to leave
for Canada in a month’s time. Heeding accused-appellant’s guaranty, Marie eventually applied
for the overseas job opportunity.
On June 6, 1997, accused-appellant introduced Marie to co-accused Nenita Maria Olivia-
Gallardo in Tandang Sora, Quezon City. On the same day, Marie submitted herself to a
physical examination and personally handed to Gallardo a partial payment of P18,000.00, for
which the latter issued a receipt.7 Marie made another payment in the amount of P52,000.00,
for which accused-appellant issued a provisional receipt.8 This amount included the placement
fee of her sister, Araceli Abenoja, who became interested in the opportunity to work abroad.
Accused-appellant issued to Marie the receipt9 for Araceli in the amount of P35,000.00, signed
by Gallardo.
Three months lapsed without any news on Marie’s deployment to Canada. Her sister, Araceli,
had already left for work abroad through the efforts of their other town-mate. The weekly
follow-ups made by Marie to accused-appellant pertaining to her application and that of
Araceli’s were to no avail. Accused-appellant just promised Marie that she will return her
money. Realizing that she had been hoodwinked, Marie decided to file a complaint against the
accused-appellant and Gallardo with the National Bureau of Investigation. She no longer
verified the authority of both accused-appellant and Gallardo in recruiting workers overseas
because she was told by Gallardo that she is a direct recruiter.10
Marilyn Mariano, on the other hand, was told by accused-appellant that she was recruiting
nurses from Baguio City and was looking for one more applicant to complete the first batch
to fly to Canada. After giving her all the information about the job opportunity in Canada,
accused-appellant encouraged her to meet Gallardo. Not long after, Grace Lanozo
accompanied her to meet Gallardo at the latter’s house in Quezon City.
Gallardo required her to undergo a medical check-up, to complete her application papers
within the soonest possible time and to prepare money to defray the expenses for her
deployment to Canada. Upon the instruction of accused-appellant, Marilyn paid a total amount
of P36,000.00 to Gallardo, which was evidenced by a receipt. Of this amount, the P1,500.0011
was for her medical check-up, P20,000.0012 for processing of papers and P15,000.0013 for
her visa.
Marilyn was further made to accomplish a form, prepared by both accused-appellant and
Gallardo, at the residence of accused-appellant in Baguio City. Thereafter, she was informed
that the processing of her papers abroad shall commence within the next three months. She
was also made to attend a meeting conducted by both accused-appellant and Gallardo at the
former’s house in Baguio City, together with other interested applicants.
After three months of waiting with no forthcoming employment abroad, Marilyn and the other
applicants proceeded to the Philippine Overseas Employment Agency, Regional Administrative
Unit, of the Cordillera Administrative Region in Baguio City, where they learned that accused-
appellant and Gallardo were not authorized recruiters.14 Marilyn confronted accused-
appellant about this, whereupon the latter assured her that it was a direct hiring scheme.
Thereafter, Marilyn reported accused-appellant and Gallardo to the NBI. 15
After trial on the merits, accused-appellant was found guilty of the crimes of Illegal
Recruitment in Large Scale and Estafa on three (3) counts. The dispositive portion of the
decision reads:
WHEREFORE, the Court finds accused Remedios Malapit GUILTY beyond reasonable doubt
with the crimes of Illegal Recruitment in Large Scale, and Estafa in three (3) counts, and she
is hereby sentenced as follows:
1. To suffer Life Imprisonment at the Correctional Institution for Women, Mandaluyong City
in Criminal Cases Nos. 15320-R and 15770-R for Illegal Recruitment in Large Scale; to pay a
Fine to the Government in the amount of One Hundred Thousand (P100,000.00) Pesos; and
to pay private complainants, Marie Purificacion Abenoja, the amount of Thirty Five Thousand
(P35,000.00) Pesos; Araceli Abenoja also the amount of Thirty Five Thousand (P35,000.00)
Pesos; and Marilyn Mariano, the amount of Thirty Six Thousand Five Hundred (P36,500.00)
Pesos, all amounts with legal interest.
2. To suffer Imprisonment at the same Institution from Six (6) Years, Five (5) Months, and
Eleven (11) Days as Minimum to Seven (7) Years, Eight (8) Months, and Twenty (20) Days
as Maximum of Prision Mayor for each Estafa case in Criminal Cases Nos. 15323-R, 15327-R,
and 15571-R.
3. To pay costs of suit.16
Accused-appellant is now before us on the following assignment of errors:
I
233
THE TRIAL COURT ERRED IN CONCLUDING THAT THE PROSECUTION SUCCEEDED IN
PROVING THE GUILT OF ACCUSED-APPELLANT BEYOND REASONABLE DOUBT FOR THE
CRIME OF ILLEGAL RECRUITMENT.
II
THE TRIAL COURT ERRED IN CONCLUDING THAT THE PROSECUTION SUCCEEDED IN
PROVING THE GUILT OF ACCUSED-APPELLANT BEYOND REASONABLE DOUBT FOR THREE
COUNTS OF ESTAFA.
III
THE TRIAL COURT ERRED IN NOT DISMISSING CRIMINAL CASES NOS. 15570-R AND 15571-
R FOR ABSENCE OF EVIDENCE RESULTING FROM THE FAILURE OF THE COMPLAINING
WITNESS TO APPEAR AND SUBSTANTIATE HER COMPLAINT.
IV
GRANTING ARGUENDO THAT ACCUSED-APPELLANT COMMITTED ILLEGAL RECRUITMENT,
THE TRIAL COURT ERRED IN CONVICTING HER OF ILLEGAL RECRUITMENT IN LARGE SCALE.
Accused-appellant maintains that she did not commit any of the activities enumerated in the
Labor Code on illegal recruitment in connection with the applications of the private
complainants. It was Nenita Maria Olivia Gallardo who convinced and promised private
complainants employment overseas. It was also Gallardo who received and misappropriated
the money of private complainants. Accordingly, she cannot be convicted of estafa.
We do not agree.
Illegal recruitment is committed when two (2) essential elements concur:
(1) that the offender has no valid license or authority required by law to enable him to lawfully
engage in the recruitment and placement of workers, and
(2) that the offender undertakes any activity within the meaning of "recruitment and
placement" defined under Article 13(b), or any prohibited practices enumerated under Article
34 of the Labor Code.17
Article 13(b) of the Labor Code defines recruitment and placement as:
Any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring
workers, and includes referrals, contract services, promising or advertising for employment,
locally or abroad, whether for profit or not: Provided, that any person or entity which, in any
manner, offers or promises for a fee employment to two or more persons shall be deemed
engaged in recruitment and placement.
In the case at bar, the first element is present. Nonette Legaspi-Villanueva, the Overall
Supervisor of the Regional Office of the POEA in Baguio City, testified that per records, neither
accused-appellant nor Gallardo were licensed or authorized to recruit workers for overseas
employment in the City of Baguio or in any part of the Cordillera Region.
The second essential element is likewise present. Accused-appellant purported to have the
ability to send Marie Purificacion Abenoja, Araceli Abenoja and Marilyn Mariano for
employment abroad through the help of her co-accused Gallardo, although without any
authority or license to do so. Accused-appellant was the one who persuaded them to apply
for work as a caregiver in Canada by making representations that there was a job market
therefor.18 She was also the one who helped them meet Gallardo in order to process their
working papers and personally assisted Marie, Araceli and Marilyn in the completion of the
alleged requirements.19 Accused-appellant even provided her house in Baguio City as venue
for a meeting with other applicants that she and Gallardo conducted in connection with the
purported overseas employment in Canada.20 Accused-appellant, therefore, acted as an
indispensable participant and effective collaborator of co-accused Gallardo, who at one time
received placement fees21 on behalf of the latter from both Marie and Araceli Abenoja. The
totality of the evidence shows that accused-appellant was engaged in the recruitment and
placement of workers for overseas employment under the above-quoted Article 13 (b) of the
Labor Code. Hence, she cannot now feign ignorance on the consequences of her unlawful
acts.
Accused-appellant’s claim that the other private complainants in Criminal Case No. 15320-R,
for illegal recruitment in large scale, have executed their individual affidavits of desistance
pointing to Gallardo as the actual recruiter, deserves scant consideration. The several
Orders22 issued by the trial court show that the dismissal of the complaints of the other
private complainants were based on their failure to substantiate and prosecute their individual
complaints despite due notice.*
The foregoing notwithstanding, the existence of the adverted affidavits of desistance does not
appear in the records of this case and, thus, may not be given any probative weight by this
Court. Any evidence that a party desires to submit for the consideration of the court must be
formally offered by him, otherwise, it is excluded and rejected.23 Evidence not formally
offered before the trial court cannot be considered on appeal, for to consider them at such
stage will deny the other parties their right to rebut them.24 By opting not to present them
in court, such affidavits of desistance are generally hearsay and have no probative value since
the affiants thereof were not placed on the witness stand to testify thereon.25 The reason for
the rule prohibiting the admission of evidence that has not been formally offered is to afford
the other party the chance to object to their admissibility.26
234
All told, the evidence against accused-appellant has established beyond a shadow of doubt
that she actively collaborated with co-accused Gallardo in illegally recruiting the complainants
in this case. As correctly pointed out by the trial court, the private complainants in this case
would not have been induced to apply for a job in Canada were it not for accused-appellant’s
information, recruitment, and introduction of the private complainants to her co-accused
Gallardo.
Likewise untenable are accused-appellant’s claims that she did not represent herself as a
licensed recruiter,27 and that she merely helped complainants avail of the job opportunity. It
is enough that she gave the impression of having had the authority to recruit workers for
deployment abroad. In fact, even without consideration for accused-appellant’s "services",
she will still be deemed as having engaged in recruitment activities, since it was sufficiently
demonstrated that she promised overseas employment to private complainants.28 Illegal
recruitment is committed when it is shown that the accused-appellant gave the private
complainants the distinct impression that she had the power or ability to send complainants
abroad for work such that the latter were convinced to part with their money in order to be
employed.29 To be engaged in the practice and placement, it is plain that there must at least
be a promise or offer of an employment from the person posing as a recruiter whether locally
or abroad.30
Undoubtedly, the acts of accused-appellant showed unity of purpose with those of co-accused
Gallardo. All these acts establish a common criminal design mutually deliberated upon and
accomplished through coordinated moves. There being conspiracy, accused-appellant shall be
equally liable for the acts of her co-accused even if she herself did not personally reap the
fruits of their execution.
While accused-appellant is guilty of illegal recruitment, we do not agree with the trial court
that the same qualifies as large scale.
Accused-appellant’s conviction of the illegal recruitment in large scale was based on her
recruitment of Marie Purificacion Abenoja and Marilyn Mariano, private complainants in
Criminal Case No. 15320-R, and Araceli Abenoja, private complainant in Criminal Case No.
15570-R. It was error for the trial court to consider the three private complainants in the two
criminal cases when it convicted accused-appellant of illegal recruitment committed in large
scale. The conviction of illegal recruitment in large scale must be based on a finding in each
case of illegal recruitment of three or more persons, whether individually or as a group. In
People v. Reichl, et al.,31 we reiterated the rule we laid down in People v. Reyes32 that:
x x x When the Labor Code speaks of illegal recruitment "committed against three (3) or more
persons individually or as a group," it must be understood as referring to the number of
complainants in each case who are complainants therein, otherwise, prosecutions for single
crimes of illegal recruitment can be cumulated to make out a case of large scale illegal
recruitment. In other words, a conviction for large-scale illegal recruitment must be based on
a finding in each case of illegal recruitment of three or more persons whether individually or
as a group. (Underscoring ours)
Accused-appellant likewise assails the decision of the trial court in Criminal Cases Nos. 15570-
R and 15571-R for simple illegal recruitment and estafa, respectively, saying that these two
criminal cases should have been dismissed for lack of evidence. The only evidence presented
in these cases was the testimony of Marie Purificacion Abenoja, Araceli Abenoja’s sister, on
her alleged payment of the placement fees for Araceli’s application. By Araceli’s failure to
testify, she failed to prove the facts and circumstances surrounding her alleged recruitment
and the person accountable therefor.
We are not persuaded. In People v. Gallarde,33 we held:
Direct evidence of the commission of a crime is not the only matrix wherefrom a trial court
may draw its conclusion and finding of guilt. The prosecution is not always tasked to present
direct evidence to sustain a judgment of conviction; the absence of direct evidence does not
necessarily absolve an accused from any criminal liability. Even in the absence of direct
evidence, conviction can be had on the basis of circumstantial evidence, provided that the
established circumstances constitute an unbroken chain which leads one to one fair and
reasonable conclusion which points to the accused, to the exclusion of all others, as the guilty
person, i.e., the circumstances proved must be consistent with each other, consistent with
the hypothesis that the accused is guilty, and at the same time inconsistent with any other
hypothesis except that of guilty.
The rules on evidence and precedents sustain the conviction of an accused through
circumstantial evidence, as long as the following requisites are present: (1) there must be
more than one circumstance; (2) the inference must be based on proven facts; and (3) the
combination of all circumstances produces a conviction beyond reasonable doubt of the guilt
of the accused.
The circumstantial evidence in the case at bar, when scrutinized and taken together, leads to
no other conclusion than that accused-appellant and co-accused Gallardo conspired in
recruiting and promising a job overseas to Araceli Abenoja. Moreover, Marie Purificacion
Abenoja had personal knowledge of the facts and circumstances surrounding the charges filed
by her sister, Araceli, for simple illegal recruitment and estafa. Marie was privy to the
recruitment of Araceli as she was with her when both accused-appellant and Gallardo required
Araceli to undergo physical examination to find out whether the latter was fit for the job
abroad.34 Accused-appellant even admitted that she was the one who introduced Marie and
Araceli to Gallardo when they went to the latter’s house.35 Marie was the one who shouldered
the placement fee of her sister Araceli.36
Furthermore, the private complainants in this case did not harbor any ill motive to testify
falsely against accused-appellant and Gallardo. Accused-appellant failed to show any
animosity or ill-feeling on the part of the prosecution witnesses which could have motivated
235
them to falsely accuse her and Gallardo. It would be against human nature and experience
for strangers to conspire and accuse another stranger of a most serious crime just to mollify
their hurt feelings.37 As such, the testimony of private complainants that accused-appellant
was the person who transacted with them, promised them jobs and received money therefor,
was correctly given credence and regarded as trustworthy by the trial court.
In sum, accused-appellant is only guilty of two (2) counts of illegal recruitment. Under Section
7 of Republic Act No. 804238 otherwise known as the "Migrant Workers Act of 1995," any
person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not less
than six (6) years and one (1) day but not more than twelve (12) years and a fine of not less
than two hundred thousand pesos (P200,000.00) nor more than five hundred thousand pesos
(P500,000.00).
The provisions of the Indeterminate Sentence Law are applicable, as held in People v.
Simon:39
It is true that Section 1 of said law, after providing for indeterminate sentence for an offense
under the Revised Penal Code, states that "if the offense is punished by any other law, the
court shall sentence the accused to an indeterminate sentence, the maximum term of which
shall not exceed the maximum fixed by said law and the minimum shall not be less than the
minimum term prescribed by the same." We hold that this quoted portion of the section
indubitably refers to an offense under a special law wherein the penalty imposed was not
taken from and is without reference to the Revised Penal Code, as discussed in the preceding
illustrations, such that it may be said that the "offense is punished" under that law.
Guided by the foregoing principle, accused-appellant shall be made to suffer a prison term of
six (6) years and one (1) day, as minimum, to twelve (12) years, as maximum, and to pay a
fine of P200,000.00, for each count of illegal recruitment.
The Court likewise affirms the conviction of accused-appellant for estafa on three (3) counts.
It is settled that a person may be charged and convicted separately of illegal recruitment
under the Labor Code and estafa under the Revised Penal Code, Article 315, paragraph 2(a).
As we held in People v. Yabut:40
In this jurisdiction, it is settled that a person who commits illegal recruitment may be charged
and convicted separately of illegal recruitment under the Labor Code and estafa under par. 2
(a) of Art. 315 of the Revised Penal Code. The offense of illegal recruitment is malum
prohibitum where the criminal intent of the accused is not necessary for conviction, while
estafa is malum in se where the criminal intent of the accused is crucial for conviction.
Conviction for offenses under the Labor Code does not bar conviction for offenses punishable
by other laws. Conversely, conviction for estafa under par. 2 (a) of Art. 315 of the Revised
Penal Code does not bar a conviction for illegal recruitment under the Labor Code. It follows
that one’s acquittal of the crime of estafa will not necessarily result in his acquittal of the
crime of illegal recruitment in large scale, and vice versa.1âwphi1
The prosecution has proven beyond reasonable doubt that accused-appellant was guilty of
estafa under the Revised Penal Code, Article 315 paragraph (2) (a), which provides that estafa
is committed:
2. By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of fraud:
(a) By using fictitious name or falsely pretending to possess power, influence, qualifications,
property, credit, agency, business or imaginary transactions, or by means of other similar
deceits.
The evidence is clear that in falsely pretending to possess the power to deploy persons for
overseas placement, accused-appellant deceived Marie, Araceli and Marilyn into believing that
the recruitment would give them greener opportunities as caregivers in Canada. Accused-
appellant’s assurance constrained the private complainants to part with their hard-earned
money in exchange for a slot in the overseas job in Canada. The elements of deceit and
damage for this form of estafa are indisputably present. Hence, the conviction of accused-
appellant for three (3) counts of estafa in Criminal Cases Nos. 15323-R, 15327-R and 15571-
R should be upheld.
Under the Revised Penal Code, an accused found guilty of estafa shall be sentenced to:
x x x The penalty of prision correccional in its maximum period to prision mayor in its minimum
period, if the amount of the fraud is over 12,000 but does not exceed 22,000 pesos, and if
such amount exceeds the latter sum, the penalty provided in this paragraph shall be imposed
in its maximum period, adding one year for each additional 10,000 pesos; x x x.
In applying the provisions of the Indeterminate Sentence Law, we had occasion to reiterate
our ruling in People v. Ordono41 in the very recent case of People v. Angeles,42 to wit:
Under the Indeterminate Sentence Law, the maximum term of the penalty shall be "that
which, in view of the attending circumstances, could be properly imposed" under the Revised
Penal Code, and the minimum shall be "within the range of the penalty next lower to that
prescribed for the offense." The penalty next lower should be based on the penalty prescribed
by the Code for the offense, without first considering any modifying circumstances attendant
to the commission of the crime. The determination of the minimum penalty is left by law to
the sound discretion of the court and it can be anywhere within the range of the penalty next
lower without any reference to the periods into which it might be subdivided. The modifying
circumstances are considered only in the imposition of the maximum term of the
indeterminate sentence.
Similarly, in People v. Saulo,43 we further elucidated on how to apply the Indeterminate
Sentence Law for the charge of estafa:
236
Since the penalty prescribed by law for the estafa charge against accused-appellant is prision
correccional maximum to prision mayor minimum, the penalty next lower in degree is prision
correccional minimum to medium. Thus, the minimum term of the indeterminate sentence
should be anywhere within six (6) months and one (1) day to four (4) years and two (2)
months.
In fixing the maximum term, the prescribed penalty of prision correccional maximum to
prision mayor minimum should be divided into three equal portions of time, each of which
portion shall be deemed to form one period, as follows —
Minimum Period: From 4 years, 2 months and 1 day to 5 years, 5 months and 10 days
Medium Period: From 5 years, 5 months and 11 days to 6 years, 8 months and 20 days
Maximum Period: From 6 years, 8 months and 21 days to 8 years
pursuant to Article 65, in relation to Article 64, of the Revised Penal Code.
When the amounts involved in the offense exceeds P22,000, the penalty prescribed in Article
315 of the Revised Penal Code shall be imposed in its maximum period, adding one year for
each additional P10,000.00, although the total penalty which may be imposed shall not exceed
twenty (20) years.
In Criminal Case No. 15323-R, Marilyn Mariano testified that upon instruction of accused-
appellant she gave accused Gallardo a total of P36,500.00.
In Criminal Case Nos. 15327-R and 15571-R, Marie Purificacion Abenoja testified that she
gave the amounts of P18,000.00 and P52,000.00 to accused Gallardo and accused-appellant.
Out of the amount of P52,000.00, P35,000.00 was intended to answer for the placement fee
of her sister Araceli Abenoja, the private complainant in Criminal Case No. 15571-R. The
remaining P17,000.00 formed part of the balance of Marie’s placement fee. Accordingly,
accused-appellant shall be criminally liable for the amount of P35,000.00 in Criminal Cases
No. 15327-R and P35,000.00 in Criminal Case No. 15571-R.
WHEREFORE, in view of the foregoing, the appealed Decision of the Regional Trial Court of
Baguio City, Branch 3 is AFFIRMED with the following MODIFICATIONS:
(1) In Criminal Case No. 15320-R, accused-appellant Remedios Malapit is found GUILTY
beyond reasonable doubt of the crime of Simple Illegal Recruitment only, and is sentenced to
suffer a prison term of six (6) years and one (1) day, as minimum, to twelve (12) years, as
maximum, and to pay a fine of P200,000.00.
(2) In Criminal Case No. 15323-R, accused-appellant Remedios Malapit is found GUILTY
beyond reasonable doubt of the crime of Estafa and sentenced to suffer a prison term of four
(4) years and two (2) months of prision correccional, as minimum, to nine (9) years and four
(4) months of prision mayor, as maximum, and is ORDERED to indemnify Marilyn Mariano the
amount of P36,500.00.
(3) In Criminal Case No. 15327-R, accused-appellant Remedios Malapit is found GUILTY
beyond reasonable doubt of the crime of Estafa and sentenced to suffer a prison term of four
(4) years and two (2) months of prision correccional, as minimum, to nine (9) years and four
(4) months of prision mayor, as maximum, and is ORDERED to indemnify Marie Purificacion
Abenoja the amount of P35,000.00.
(4) In Criminal Case No. 15570-R, accused-appellant Remedios Malapit is found GUILTY
beyond reasonable doubt of the crime of Simple Illegal Recruitment and is sentenced to suffer
a prison term of six (6) years and one (1) day, as minimum, to twelve (12) years, as
maximum, and to pay a fine of P200,000.00.
(5) In Criminal Case No. 15571-R, accused-appellant Remedios Malapit is found GUILTY
beyond reasonable doubt of the crime of Estafa and sentenced to suffer a prison term of four
(4) years and two (2) months of prision correccional, as minimum, to nine (9) years and four
(4) months of prision mayor, as maximum, and is ORDERED to indemnify Araceli Abenoja the
amount of P35,000.00
SO ORDERED.
G.R. No. 123162 October 13, 1998
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
NENITA T. JUEGO and WILFREDO GAERLAN, accused, NENITA T. JUEGO, accused-
appellant.
BELLOSILLO, J.:
NENITA JUEGO and WILFREDO GAERLAN were charged before the Regional Trial Court of
Manila with Illegal Recruitment in Large Scale by twenty-six (26) individual complainants.1
In addition, Nenita and Wilfredo were also charged with three (3) counts of Estafa
by three (3)2 of the twenty-six (26) offended parties. Only Nenita stood trial as
Wilfredo has eluded arrest and remains at large.
237
Of the twenty-six (26) complainants, only six (6)3 pursued the illegal recruitment
case. Five (5) 4 complaining witnesses were duly notified of the scheduled hearing
but refused to sign the subpoena due to lack of interest to prosecute the case. The
rest of the complainants were likewise duly notified but failed to appear and testify.
5 correccional as minimum and not more than eight (8) years of prision mayor as
In her defense, Nenita contended that the alleged recruiting firm, AJ International
Trade Link, was a sole proprietorship of her husband Abelardo who, before his death
in 1992, was engaged in real estate business and importation of cement and
fertilizer from Iraq. Although Abelardo was given a special power of attorney by two
(2) licensed agencies accredited by the Taiwan Labor he was not actually engaged
in recruitment. The complainants had approached him for assistance because they
knew he had many friends abroad. Complainants then came to her to follow up the
status of their applications but she told them that her husband was still abroad. This
was her sole participation in his professional affairs as she was a plain housewife.
After Abelardo died complainants stopped asking her about their applications.
Nenita's testimony was corroborated by Jose Juego, the elder brother of Abelardo.
On 19 January 1995 the Manila Regional Trial Court rendered judgment adverse to
Nenita T. Juego except as to one (1) count of estafa thus —
a) In Criminal Case No. 93-128140 finding accused Nenita Juego guilty beyond
reasonable doubt of having committed the crime of illegal recruitment and
accordingly sentencing her to serve the penalty of life imprisonment considering
that the crime was committed in large scale and to restitute to herein complainants
the payments made by them, as follows: (1) Anastacio Magleo — P21,315.00 (Exhs.
"A," "B" and "C"); (2) Fernando Magalong — P11,065.00 (Exh. "D"); (3) Manuel
Aquino — P7,500.00); (4) Raul Romero — P30,115.00 (Exhs. "E," "F," "G," "H," and
"I"); (5) Jonas Macasieb — P5,200.00 (Exh. "J"); (6) Patricio Garin, Jr. — P4,500.00
(Exh. "K");
b) In Criminal Case No. 93-128141, finding accused Nenita Juego guilty beyond
reasonable doubt of having committed estafa under Article 315 (2) (a) of the
Revised Penal Code and hereby sentencing her in accordance with the 1st paragraph
of Article 315 of the Revised Penal Code the indeterminate penalty of not less than
two (2) years of prision correccional as minimum and not more than nine (9) years
of prision mayor as maximum, with all the accessory penalties provided for by law
and to pay the costs and to restitute to Anastacio Magleo the aggregate amount of
P21,315.00 representing the payments made to accused;
c) In Criminal Case No. 93-128142, finding accused Nenita Juego not guilty on the
ground of insufficiency of evidence;
d) In Criminal Case No. 93-128143, finding accused Nenita Juego guilty beyond
reasonable doubt of estafa under Article 315 (2) (a) of the Revised Penal Code and
hereby sentencing her in accordance with the 1st paragraph of Article 315 of the
Revised Penal Code to serve the penalty of not less than two (2) years of prision
maximum, with all the accessory penalties provided by law and to pay the costs and
to restitute to Raul Romero the aggregate amount of P30,115.00 representing the
payments made to accused.6
As regards accused Wilfredo Gaerlan, a warrant for his arrest stands.
The antecedents: Sometime in April 1992 Anastacio Magleo met Nenita in Laoac,
Pangasinan, through his sister-in-law. Nenita convinced him to apply as factory
worker in Taiwan with a salary of approximately $500.00 a month with free
accommodation. For this purpose, she persuaded him to give an initial payment for
processing fee.
On 10 October 1992 Anastacio went to Nenita's office, AJ International Trade Link,
at Amparo Building, España St., Sampaloc, Manila, where he gave her an initial
payment of P15,000.00. She issued a receipt7 but signed the name of her husband
Abelardo Juego thereon with the excuse that he was out of town. She told Anastacio
that she would be able to send him to Taiwan that month but first he must pay the
balance of the fee. She even showed him certain job orders from Taiwan and a Block
Visa. Also, on the same day, Anastacio gave Wilfredo Gaerlan, secretary of Abelardo,
P1,115.00 in payment for insurance as evidenced by a PHILAM temporary receipt.8
On 28 October 1992 Anastacio returned to the office of Nenita and gave her an
additional P5,200.00 as evidenced by a receipt 9 signed by her in the name of her
husband. She assured Anastacio that in case he could not leave as she previously
committed, he would go in the first week of November. When the promised date
came, Wilfredo told him to wait. Anastacio just did what he was told and waited for
more than a year. After biding his time and getting tired of waiting, he returned to
the office of the AJ International Trade Link to withdraw his payments but could not
find Nenita there. He eventually found her in the house of her brother-in-law where
she tried to convince him not to withdraw his payments because there was a job
order coming from Malaysia. He stubbornly insisted on a refund but to no avail.
Upon advice of a certain Engr. Toledo, a friend of Abelardo Juego, Fernando
Magalong went on 3 September 1992 to the AJ International Trade Link to apply for
a job. He conferred with Abelardo and Nenita, who told him there was a slot for him
in Taiwan as a contract worker. She required him to submit an NBI clearance, his
passport and pictures, and to pay P8,000.00. Fernando personally handed over the
amount to her in the office. On 9 October 1992 he gave Wilfredo P1,115.00 for
insurance as evidenced by a receipt of PHILAM Plans, Inc. 10 and P950.00 for
238
medical examination. He was not however able to leave for Taiwan. Having failed to
get a refund, he filed a complaint with the National Bureau of Investigation against
Nenita and Wilfredo.
Manuel Aquino was also referred to Nenita by Engr. Toledo. He met her in Laoac,
Pangasinan. Nenita told Manuel that she could deploy him to Taiwan as a factory
worker. Later he also met Abelardo who told him together with other applicants to
undergo a seminar training for a day in Dagupan City. Engr. Toledo paid their
training fees. The Juegos told him to prepare his passport, pictures, medical
certificate and clearances from the NBI, police and barangay. They required him to
pay P35,000.00 but could only give a down payment of P7,500.00 which he did in
their office. He submitted all the required documents to Abelardo who then
reminded him and his co-applicants to prepare their bank accounts and especially
their clothes. While they waited for word as to their departure, Abelardo died but
Nenita reassured them that she would take charge of processing their papers. They
waited for more than a year but she was not able to send them abroad. In fact, she
went into hiding to avoid them.
Raul Romero was recruited in January 1991 by some of the sub-recruiters of the
Juegos. He and his companions were told by the Juegos that as workers in Taiwan
they would earn $700.00 per month and would depart in one (1) or three (3)
months' time. He was required to submit all the necessary papers for his overseas
employment and to pay a processing fee of P30,000.00. His payments which totalled
P30,115.00 were evidenced by receipts, 11 three (3) of which were signed by
Wilfredo, one (1) by Abelardo, and one (1) by Nenita. He and the other applicants
waited for several months but were unable to leave. He wanted to confront Nenita
but could not locate her until he was informed of her arrest and detention at the
Western Police Headquarters. When they met she explained her predicament, that
is, she could not withdraw the deposit of Abelardo from the bank since they were
not legally married. As things turned out, she could not return even a portion of
their payments.
Jonas Macasieb first met Nenita when he and other applicants went to her house in
Laoac, Pangasinan in 1991. She told them that she and her husband had connections
in Taiwan. Afterwards, they went to the office of Abelardo at the Amparo Bldg. in
España, Manila. He interviewed them individually inside his office while Nenita
stayed outside. He instructed Jonas to submit his passport and clearances from the
Mayor, NBI, police and barangay. On 26 August 1992 Jonas paid P5,200.00 as
evidenced by a receipt. 12 He followed up his application four (4) times but he was
told each time that there was no scheduled departure. He was repeatedly assured
that he would be leaving very soon. His trip was set on 30 October 1992 only to be
postponed. He waited patiently because Nenita assured him of an early departure.
Unfortunately, he was not able to leave and when he tried to confront her he found
the office closed.
Patricio Garin Jr. knew Nenita as a recruiter of workers for Taiwan. He was
recommended to her by Engr. Toledo. In August 1992 Patricio went to the office of
Nenita at the Amparo Bldg. to apply for employment abroad. He first talked to
Wilfredo then to Abelardo and Nenita. She told him to submit his passport,
clearances from the Mayor, NBI, police and barangay, result of physical and medical
examination, and to pay the placement fee of P10,000.00. He could only give her a
down payment of P4,500.00. 13 After submitting all the requirements she told him
that once his papers were processed, he would leave last week of October 1992.
Sometime in September 1992 he followed up his application but Nenita informed
him that her husband was still in Taiwan. She then advised Patricio to take care of
himself. By the end of October he returned to her office but was not able to talk to
her. It was Wilfredo who told him that his departure had been postponed. He kept
on following up his application until he learned that Abelardo had died. He was not
able to talk to Nenita and Wilfredo because they were not anymore in the office.
They had disappeared.
The Chief of the Licensing Branch of the Philippine Overseas Employment
Administration issued a certification 14 that "Nenita Juego and Wilfredo Gaerlan in
their personal capacities . . . is (sic) neither licensed nor authorized by this
Administration to recruit workers for overseas employment."
Nenita T. Juego, in this appeal, insists that she has nothing to do with the
recruitment activities of her deceased husband. Had she interfered therewith she
would have signed the receipts in her own name.
We are not persuaded. Article 13, par. (b), of the Labor Code defines recruitment as
referring to —
. . . any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not: Provided,
That any person or entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged in recruitment and
placement.
Under Art. 38, par. (a), of the same Code, any recruitment activity including the
prohibited practices enumerated in Art. 34, becomes illegal when undertaken by
non-licensees or non-holders of authority.
As stated by the trial court, based on People v. Naparan Jr., 15 illegal recruitment
is committed when these requisites concur: (a) that the offender has no valid
license or authority required by law to enable one to engage in recruitment and
placement of workers; and, (b) that the offender undertakes any activity within the
meaning given to recruitment and placement by the pertinent provisions of the
239
Labor Code. The certification issued by the POEA clearly showed that appellant did
not possess the requisite license or authority. And despite the absence thereof she
engaged in recruitment activities as overwhelmingly substantiated by the
prosecution witnesses.
The complainants positively identified appellant as their recruiter for employment
abroad, bringing into play the same modus operandi for all. They were one in stating
that appellant assured them that there were jobs for them in Taiwan and inveigled
them into paying processing or placement fees. As against the hard evidence built
by the prosecution, appellant's defense was a mere denial which the trial court
found to be weak; so does this Court. Appellant's attack is ultimately directed
against the credibility of the complainants, the best judge of which is the trial court.
In the matter of weighing the evidence of the prosecution vis-a-vis that of the
defense through an assessment of their respective merits, it is firmly settled that
the findings of the trial court are given great weight and the highest degree of
respect by the appellate court, and may be disregarded only where substantial
errors have been committed or determinative facts have been overlooked which
otherwise would have dictated a different conclusion or verdict.
Appellant's arguments that if she really participated in the recruitment activities of
her husband she would have signed the receipts in her name and that her signature
on a particular receipt was not genuine are irrelevant since her precise role in the
illegal recruitment has been adequately demonstrated through other means.
Moreover the prosecution could have dispensed with the presentation of the
receipts. This Court has ruled in several cases that the absence of receipts in a case
for illegal recruitment does not warrant the acquittal of the accused and is not fatal
to the case of the prosecution. As long as the witnesses positively show through
their respective testimonies that the accused is the one involved in the prohibited
recruitment, he may be convicted of the offense despite the lack of receipts. 16
Art. 38, par. (b), of the Labor Code provides that illegal recruitment is deemed
committed in large scale if committed against three (3) or more persons individually
or as a group. And when so committed it is considered an offense involving economic
sabotage punishable under Art. 39, par. (a), of the same Code with life
imprisonment and fine of one hundred thousand pesos (P100,000.00). Appellant
having originally recruited twenty-six (26) persons — although only six (6) pursued
their case — without license or authority was properly convicted by the trial court
in Crim. Case No. 93-128140 of illegal recruitment in large scale and properly
sentenced to life imprisonment pursuant to Art. 39, par. (a) of the Labor Code.
However, the trial court erroneously omitted the penalty of fine which the law
requires to be imposed in addition to the life sentence. Thus, the correct penalty is
life imprisonment and a fine of one hundred thousand pesos (P100,000.00). In
addition, appellant should be made to indemnify the complainants in the amounts
respectively paid by them.
In this jurisdiction, it is settled that a person who commits illegal recruitment may
be charge and convicted separately of illegal recruitment and estafa under par. 2
(a), Art. 315, of The Revised Penal Code, as the offense of illegal recruitment is
malum prohibitum where the criminal intent of the accused is not necessary for
conviction, while estafa is malum in se where the criminal intent of the accused is
crucial for conviction. 17 In other words, a conviction for offenses under the Labor
Code does not bar punishment for offenses punishable by other laws. 18
Swindling (estafa) is committed by any person who shall defraud another by using
fictitious name, or falsely pretending to possess power, influence, qualifications,
property, credit, agency, business or imaginary transaction, or by means of other
similar deceits executed prior to or simultaneously with the commission of the
fraud. 19
The elements of this kind of estafa are: (a) that there must be a false pretense,
fraudulent act or fraudulent means; (b) that such false pretense, fraudulent act or
fraudulent means must be made or executed prior to or simultaneously with the
commission of the fraud; (c) that the offended party must have relied on the false
pretense, fraudulent act or fraudulent means, i.e., he was induced to part with his
money or property because of the false pretense, fraudulent act or fraudulent
means; and, (d) that as a result thereof, the offended party suffered damage. 20 All
these elements are present in the instant case: accused-appellant Nenita T. Juego
deceived the complaining witnesses into believing that she had the authority and
capability to send them abroad for employment; that there were available jobs for
them in Taiwan for which they would be hired although there were none; and, that
by reason or on the strength of such assurance, the complainants parted with their
money in payment of the placement fee. All these representations of appellant were
actually false and fraudulent; consequently she should be made liable under par. 2
(a), Art. 315 of The Revised Penal Code. 21
The penalty for estafa depends on the amount defrauded. The first paragraph of Art.
315 prescribes the penalty of "prision correccional in its maximum period to prision
mayor in its minimum period, if the amount of the fraud is over 12,000 pesos but
does not exceed 22,000 pesos, and if such amount exceeds the latter sum, the
penalty provided in this paragraph shall be imposed in its maximum period, adding
one year for each additional 10,000 pesos; but the total penalty which may be
imposed shall not exceed twenty years. In such cases, and in connection with the
accesory penalties which may be imposed under the provisions of this Code, the
penalty shall be termed prision mayor or reclusion temporal, as the case may be."
In Crim. Case No. 128141, Anastacio Magleo was swindled by accused-appellant
Nenita T. Juego in the amount of P21,315.00. The penalty prescribed by law is
prision correccional in its maximum period to prision mayor in its minimum period.
Applying the Indeterminate Sentence Law, there being neither mitigating or
240
aggravating circumstances, the proper penalty to be imposed on accused-appellant
is a prison term of four (4) years and two (2) months of prision correccional medium
as minimum, to six (6) years and four (4) months of prision mayor minimum as
maximum.
In Crim. Case No. 93-128143, accused-appellant also victimized Raul Romero in the
amount of P30,115.00. Applying the Indeterminate Sentence Law and there being
no modifying circumstances, the proper penalty to be imposed on accused-appellant
is imprisonment of four (4) years and two (2) months and one (1) day of prision
correccional maximum as minimum, to six (6) years eight (8) months and one (1)
day of prision mayor minimum as maximum.
WHEREFORE, the judgment appealed from finding accused-appellant NENITA T.
JUEGO guilty of Illegal Recruitment in Large Scale and two (2) counts of Estafa is
AFFIRMED with the following MODIFICATIONS —
1. In Crim. Case No. 93-128240 (Illegal Recruitment in Large Scale), accused-
appellant Nenita T. Juego is sentenced to suffer the penalty of life imprisonment, to
pay a fine of P100,000.00 and to indemnify the complaining witnesses in the
following amounts: (a) Anastacio Magleo, P21,315.00 (Exhs. "A," "B" and "C"); (b)
Fernando Magalong, P11,065.00 (Exh. "D"); (c) Manuel Aquino, P7,500.00; (d) Raul
Romero, P30,115.00 (Exhs. "E," "F," "G," "H" and "I"); (e) Jonas Macasieb,
P5,200.00 (Exh. "J"); and (f) Patricio Garin, Jr., P4,500.00 (Exh. "K").
2. In Crim. Case No. 93-128141 (Estafa), accused-appellant Nenita T. Juego is
sentenced to an indeterminate prison term of four (4) years and two (2) months of
prision correccional medium as minimum to six (6) years and four (4) months of
prision mayor minimum as maximum.
3. In Crim. Case No. 93-128143 (Estafa), accused-appellant Nenita T. Juego is
sentenced to an indeterminate prison term of four (4) years two (2) months and
one (1) day of prision correccional maximum as minimum to six (6) years eight (8)
months and one (1) day of prision mayor minimum as maximum.
In the service by accused-appellant of the various prison terms herein imposed, the
provisions of Art. 70 of The Revised Penal Code shall be observed. Costs against
accused-appellant.
SO ORDERED.
G.R. No. 146964 August 10, 2006
ROSA C. RODOLFO, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
CARPIO MORALES, J.:
Petitioner was charged before the Regional Trial Court (RTC) of Makati for illegal recruitment
alleged to have been committed as follows:
That in or about and during the period from August to September 1984, in Makati, Metro
Manila, Philippines, and within the jurisdiction of this Honorable Court, the said accused
representing herself to have the capacity to contract, enlist and transport Filipino workers for
employment abroad, did then and there willfully and unlawfully, for a fee, recruit and promise
employment/job placement abroad to VILLAMOR ALCANTARA, NARCISO CORPUZ, 1 NECITAS
R. FERRE, GERARDO H. TAPAWAN and JOVITO L. CAMA, without first securing the required
license or authority from the Ministry of Labor and Employment. 2
After trial on the merits, Branch 61 of the Makati RTC rendered its Judgment on the case, 3
the decretal portion of which reads:
WHEREFORE, PREMISES ABOVE CONSIDERED, the Court finds the accused ROSA C.
RODOLFO as GUILTY of the offense of ILLEGAL RECRUITMENT and hereby sentences her [to]
a penalty of imprisonment of EIGHT YEARS and to pay the costs. 4 (Underscoring supplied)
In so imposing the penalty, the trial court took note of the fact that while the information
reflected the commission of illegal recruitment in large scale, only the complaint of the two of
the five complainants was proven.
On appeal, the Court of Appeals correctly synthesized the evidence presented by the parties
as follows:
[The evidence for the prosecution] shows that sometime in August and September 1984,
accused-appellant approached private complainants Necitas Ferre and Narciso Corpus
individually and invited them to apply for overseas employment in Dubai. The accused-
appellant being their neighbor, private complainants agreed and went to the former’s office.
This office which bore the business name "Bayside Manpower Export Specialist" was in a
building situated at Bautista St. Buendia, Makati, Metro Manila. In that office, private
complainants gave certain amounts to appellant for processing and other fees. Ferre gave
P1,000.00 as processing fee (Exhibit A) and another P4,000.00 (Exhibit B). Likewise, Corpus
gave appellant P7,000.00 (Exhibit D). Appellant then told private complainants that they were
scheduled to leave for Dubai on September 8, 1984. However, private complainants and all
the other applicants were not able to depart on the said date as their employer allegedly did
241
not arrive. Thus, their departure was rescheduled to September 23, but the result was the
same. Suspecting that they were being hoodwinked, private complainants demanded of
appellant to return their money. Except for the refund of P1,000.00 to Ferre, appellant was
not able to return private complainants’ money. Tired of excuses, private complainants filed
the present case for illegal recruitment against the accused-appellant.
To prove that accused-appellant had no authority to recruit workers for overseas employment,
the prosecution presented Jose Valeriano, a Senior Overseas Employment Officer of the
Philippine Overseas Employment Agency (POEA), who testified that accused-appellant was
neither licensed nor authorized by the then Ministry of Labor and Employment to recruit
workers for overseas employment.
For her defense, appellant denied ever approaching private complainants to recruit them for
employment in Dubai. On the contrary, it was the private complainants who asked her help
in securing jobs abroad. As a good neighbor and friend, she brought the private complainants
to the Bayside Manpower Export Specialist agency because she knew Florante Hinahon, 5 the
owner of the said agency. While accused-appellant admitted that she received money from
the private complainants, she was quick to point out that she received the same only in trust
for delivery to the agency. She denied being part of the agency either as an owner or
employee thereof. To corroborate appellant’s testimony, Milagros Cuadra, who was also an
applicant and a companion of private complainants, testified that appellant did not recruit
them. On the contrary, they were the ones who asked help from appellant. To further bolster
the defense, Eriberto C. Tabing, the accountant and cashier of the agency, testified that
appellant is not connected with the agency and that he saw appellant received money from
the applicants but she turned them over to the agency through either Florantino Hinahon or
Luzviminda Marcos. 6 (Emphasis and underscoring supplied)
In light thereof, the appellate court affirmed the judgment of the trial court but modified the
penalty imposed due to the trial court’s failure to apply the Indeterminate Sentence Law.
The appellate court thus disposed:
WHEREFORE, finding no merit in the appeal, this Court DISMISSES it and AFFIRMS the
appealed Decision EXCEPT the penalty x x x which is hereby changed to five (5) years as
minimum to seven (7) years as maximum with perpetual disqualification from engaging in
the business of recruitment and placement of workers. 7 (Underscoring supplied)
Petitioner’s Motion for Reconsideration having been denied, 8
the present petition was filed,
faulting the appellate court
I
x x x IN GIVING CREDENCE TO THE TESTIMONIES OF THE COMPLAINING WITNESSES, [AND]
II
x x x IN FINDING THE PETITIONER-ACCUSED GUILTY WHEN THE PROSECUTION FAILED TO
PROVE HER GUILT BEYOND REASONABLE DOUBT. 9 (Underscoring supplied)
Petitioner bewails the failure of the trial court and the Court of Appeals to credit the
testimonies of her witnesses, her companion Milagros Cuadra, and Eriberto C. Tabing who is
an accountant-cashier of the agency.
Further, petitioner assails the trial court’s and the appellate court’s failure to consider that
the provisional receipts she issued indicated that the amounts she collected from the private
complainants were turned over to the agency through Minda Marcos and Florante Hinahon.
At any rate, she draws attention to People v. Señoron 10 wherein this Court held that the
issuance or signing of receipts for placement fees does not make a case for illegal recruitment.
11
The petition fails.
Articles 38 and 39 of the Labor Code, the legal provisions applicable when the offense charged
was committed, 12 provided:
ART. 38. Illegal Recruitment. – (a) Any recruitment activities, including the prohibited
practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or
non-holders of authority shall be deemed illegal and punishable under Article 39 of this Code.
xxx
Article 39. Penalties. – x x x x
(c) Any person who is neither a licensee nor a holder of authority under this Title found
violating any provision thereof or its implementing rules and regulations shall, upon conviction
thereof, suffer the penalty of imprisonment of not less than four years nor more than eight
years or a fine of not less than P20,000 nor more than P100,000 or both such imprisonment
and fine, at the discretion of the court;
x x x x (Underscoring supplied)
The elements of the offense of illegal recruitment, which must concur, are: (1) that the
offender has no valid license or authority required by law to lawfully engage in recruitment
and placement of workers; and (2) that the offender undertakes any activity within the
meaning of recruitment and placement under Article 13(b), or any prohibited practices
enumerated under Article 34 of the Labor Code. 13 If another element is present that the
accused commits the act against three or more persons, individually or as a group, it becomes
an illegal recruitment in a large scale. 14
242
Article 13 (b) of the Labor Code defines "recruitment and placement" as "[a]ny act of
canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and
includes referrals, contract services, promising or advertising for employment, locally or
abroad, whether for profit or not." (Underscoring supplied)
That the first element is present in the case at bar, there is no doubt. Jose Valeriano, Senior
Overseas Employment Officer of the Philippine Overseas Employment Administration, testified
that the records of the POEA do not show that petitioner is authorized to recruit workers for
overseas employment. 15 A Certification to that effect was in fact issued by Hermogenes C.
Mateo, Chief of the Licensing Division of POEA. 16
Petitioner’s disclaimer of having engaged in recruitment activities from the very start does
not persuade in light of the evidence for the prosecution. In People v. Alvarez, this Court held:
Appellant denies that she engaged in acts of recruitment and placement without first
complying with the guidelines issued by the Department of Labor and Employment. She
contends that she did not possess any license for recruitment, because she never engaged in
such activity.
We are not persuaded. In weighing contradictory declarations and statements, greater weight
must be given to the positive testimonies of the prosecution witnesses than to the denial of
the defendant. Article 38 (a) clearly shows that illegal recruitment is an offense that is
essentially committed by a non-licensee or non-holder of authority. A non-licensee means any
person, corporation or entity to which the labor secretary has not issued a valid license or
authority to engage in recruitment and placement; or whose license or authority has been
suspended, revoked or cancelled by the POEA or the labor secretary. A license authorizes a
person or an entity to operate a private employment agency, while authority is given to those
engaged in recruitment and placement activities.
xxxx
That appellant in this case had been neither licensed nor authorized to recruit workers for
overseas employment was certified by Veneranda C. Guerrero, officer-in-charge of the
Licensing and Regulation Office; and Ma. Salome S. Mendoza, manager of the Licensing
Branch – both of the Philippine Overseas Employment Administration. Yet, as complainants
convincingly proved, she recruited them for jobs in Taiwan. 17 (Italics in the original;
underscoring supplied)
The second element is doubtless also present. The act of referral, which is included in
recruitment, 18 is "the act of passing along or forwarding of an applicant for employment after
an initial interview of a selected applicant for employment to a selected employer, placement
officer or bureau." 19 Petitioner’s admission that she brought private complainants to the
agency whose owner she knows and her acceptance of fees including those for processing
betrays her guilt.
That petitioner issued provisional receipts indicating that the amounts she received from the
private complainants were turned over to Luzviminda Marcos and Florante Hinahon does not
free her from liability. For the act of recruitment may be "for profit or not." It is sufficient that
the accused "promises or offers for a fee employment" to warrant conviction for illegal
recruitment. 20 As the appellate court stated:
x x x Sec. 13(b) of P.D. 442 [The Labor Code] does not require that the recruiter receives
and keeps the placement money for himself or herself. For as long as a person who has no
license to engage in recruitment of workers for overseas employment offers for a fee an
employment to two or more persons, then he or she is guilty of illegal recruitment. 21
Parenthetically, why petitioner accepted the payment of fees from the private complainants
when, in light of her claim that she merely brought them to the agency, she could have
advised them to directly pay the same to the agency, she proferred no explanation.
On petitioner’s reliance on Señoron, 22 true, this Court held that issuance of receipts for
placement fees does not make a case for illegal recruitment. But it went on to state that it is
"rather the undertaking of recruitment activities without the necessary license or authority"
that makes a case for illegal recruitment. 23
A word on the penalty. Indeed, the trial court failed to apply the Indeterminate Sentence Law
which also applies to offenses punished by special laws.
Thus, Section 1 of Act No. 4103 (An Act to Provide for an Indeterminate Sentence and Parole
for All Persons Convicted of Certain Crimes by the Courts of the Philippine Islands; To Create
A Board of Indeterminate Sentence and to Provide Funds Therefor; and for Other Purposes)
provides:
SECTION 1. Hereafter, in imposing a prison sentence for an offense punished by the Revised
Penal Code, or its amendments, the court shall sentence the accused to an indeterminate
sentence the maximum term of which shall be that which, in view of the attending
circumstances, could be properly imposed under the rules of the said Code, and the minimum
which shall be within the range of the penalty next lower to that prescribed by the Code for
the offense; and if the offense is punished by any other law, the court shall sentence the
accused to an indeterminate sentence, the maximum term of which shall not exceed the
maximum fixed by said law and the minimum shall not be less than the minimum term
prescribed by the same. (As amended by Act No. 4225) (Underscoring supplied)
While the penalty of imprisonment imposed by the appellate court is within the prescribed
penalty for the offense, its addition of "perpetual disqualification from engaging in the
business of recruitment and placement of workers" is not part thereof. Such additional penalty
must thus be stricken off.
243
WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of
Appeals are AFFIRMED with MODIFICATION in that the accessory penalty imposed by it
consisting of "perpetual disqualification from engaging in the business of recruitment and
placement of workers" is DELETED.
Costs against petitioner.
SO ORDERED.
G.R. No. 179907 February 12, 2009
ARLENE N. LAPASARAN, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.
RESOLUTION
NACHURA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court, filed by petitioner
Arlene N. Lapasaran, assails the Court of Appeals Decision 1 dated June 28, 2007 and its
Resolution2 dated September 12, 2007, in CA-G.R. CR No. 29898.
The facts of the case follow:
In September 2001, private complainant Menardo Villarin (Menardo) and his sister Vilma
Villarin (Vilma) met petitioner Arlene N. Lapasaran, who worked at Silver Jet Travel Tours
Agency (Silver Jet) at SIMCAS Building, Makati. For a fee of ₱85,000.00, petitioner undertook
the processing of the papers necessary for the deployment (under a tourist visa) and
employment of Menardo in South Korea. Petitioner informed Menardo that he would be
employed as "factory worker," which was, subsequently, changed to "bakery worker." 3
Thereafter, Menardo paid the said fee in installments, the first in September 2001 in the
amount of ₱10,000.00, which was received by a certain Pastor Paulino Cajucom; 4 the second
installment was ₱35,000.00; while the third and last payment was ₱40,000.00; the last two
installments were delivered to the petitioner.5
After two postponements in his flight schedule, Menardo finally left for South Korea on
November 25, 2001. Unfortunately, he was incarcerated by South Korean immigration
authorities and was immediately deported to the Philippines because the travel documents
issued to him by the petitioner were fake. 6 He immediately contacted petitioner and informed
her of what happened. Thereupon, petitioner promised to send him back to South Korea, but
the promise was never fulfilled. Consequently, Menardo and his sister Vilma demanded the
return of the money they paid, but petitioner refused and even said, "Magkorte na lang tayo." 7
It was later found out that petitioner was no longer connected with Silver Jet.
Hence, the separate charges for illegal recruitment and estafa against petitioner before the
Regional Trial Court (RTC) of Manila. Raffled to Branch 34, the cases were docketed as
Criminal Case No. 03-215331 for Illegal Recruitment and Criminal Case No. 03-215332 for
Estafa.8 When arraigned, she pleaded not guilty to both charges.
In her defense, petitioner testified that she owned a travel agency named A&B Travel and
Tours General Services, engaged in the business of visa assistance and ticketing. She averred
that it was Vilma who solicited her assistance to secure a tourist visa for Menardo. She
admitted transacting with the Villarins, but committed only to securing a tourist visa and a
two-way airplane ticket for Menardo, for which she received ₱70,000.00 as payment. She
denied having recruited Menardo Villarin; she likewise denied having promised him
employment in South Korea.9
On February 15, 2005, the RTC rendered a Decision finding petitioner guilty beyond
reasonable doubt of illegal recruitment and estafa.10
On appeal, the Court of Appeals (CA) affirmed the RTC Decision with a modification in the
penalty imposed in Criminal Case No. 03-215332 for estafa.11
Petitioner now comes before this Court on the sole issue of:
WHETHER OR NOT THE LAWS ON ILLEGAL RECRUITMENT AND ESTAFA ARE APPLICABLE IN
THESE CASES.12
We deny the petition.
Both the trial and appellate courts found the testimonies of the prosecution witnesses credible
and convincing. We are, therefore, inclined to respect such finding. The best arbiter of the
issue of the credibility of the witnesses and their testimonies is the trial court. When the
inquiry is on that issue, appellate courts will not generally disturb the findings of the trial
court, considering that the latter was in a better position to decide the question, having heard
the witnesses themselves and having observed their deportment and manner of testifying
during the trial.1avvphi1 Its finding thereon will not be disturbed, unless it plainly overlooked
certain facts of substance and value which, if considered, may affect the result of the case.
We find no cogent reason to disturb the trial court’s conclusion, as affirmed by the CA.13
In the first case, petitioner was charged with illegal recruitment, defined and penalized by the
Labor Code as amended by Republic Act (R.A.) No. 8042. 14 Illegal recruitment is committed
when it is shown that petitioner gave the complainant the distinct impression that she had
the power or ability to send the complainant abroad for work, such that the latter was
convinced to part with his money in order to be employed. 15 To be engaged in the practice of
244
recruitment and placement, it is plain that there must, at least, be a promise or an offer of
employment from the person posing as a recruiter whether locally or abroad. 16 Petitioner’s
misrepresentations concerning her purported power and authority to recruit for overseas
employment, and the collection from Menardo of various amounts, clearly indicate acts
constitutive of illegal recruitment.
Petitioner’s claim that she did not represent herself as a licensed recruiter, but that she merely
tried to help the complainants secure a tourist visa could not make her less guilty of illegal
recruitment, it being enough that she gave the impression of having had the authority to
recruit workers for deployment abroad.17
As provided in Section 7(a)18 of R.A. No. 8042, the CA correctly affirmed the imposition of the
indeterminate penalty of six (6) years and one (1) day to eight (8) years, and the payment
of a fine of ₱200,000.00, in Criminal Case No. 03-215331.
In the second case, petitioner was charged with violation of Article 315(2)(a) of the Revised
Penal Code (RPC) which punishes estafa committed as follows:
By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the fraud:
(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications,
property, credit, agency, business or imaginary transactions, or by means of other similar
deceits.
The elements of the crime are: (a) the accused defrauded another by abuse of confidence or
by means of deceit; and (b) damage or prejudice capable of pecuniary estimation is caused
to the offended party.19
Here, it has been sufficiently proven that petitioner represented herself to Menardo as capable
of sending him to South Korea for employment, even if she did not have the authority or
license for the purpose. Undoubtedly, it was this misrepresentation that induced Menardo to
part with his hard-earned money in exchange for what he thought was a promising future
abroad. The act of petitioner clearly constitutes estafa under the above-quoted provision.20
It is well established in jurisprudence that a person may be convicted of both illegal
recruitment and estafa. The reason, therefore, is not hard to discern: illegal recruitment is
malum prohibitum, while estafa is malum in se. In the first, the criminal intent of the accused
is not necessary for conviction. In the second, such an intent is imperative. 21
Lastly, the CA correctly modified the penalty imposed by the RTC for the crime of estafa in
Criminal Case No. 03-215332.
Article 315 of the RPC fixes the penalty for Estafa, viz.:
1st. The penalty of prision correccional in its maximum period to prision mayor in its minimum
period, if the amount of the fraud is over 12,000 pesos but does not exceed 22,000 pesos;
and if such amount exceeds the latter sum, the penalty provided in this paragraph shall be
imposed in its maximum period, adding one year for each additional 10,000 pesos; but the
total penalty which may be imposed shall not exceed twenty years. In such cases, and in
connection with the accessory penalties which may be imposed and for the purpose of the
other provisions of this Code, the penalty shall be termed prision mayor or reclusion temporal,
as the case may be.lawphil.net
As the amount involved is ₱75,000.00 which exceeds ₱22,000.00, the penalty should be
imposed in its maximum period which is six (6) years, eight (8) months and twenty-one (21)
days to eight (8) years adding one year for every additional ₱10,000.00, provided the total
penalty does not exceed 20 years. Hence, since the amount of the fraud exceeds ₱22,000.00
by ₱53,000.00, then a total of five (5) years should be added to the above-stated maximum
period.
Applying the Indeterminate Sentence Law, the maximum term of the indeterminate penalty
shall be that which could be properly imposed under the RPC as discussed above. On the
other hand, the minimum term of the indeterminate sentence should be within the range of
the penalty next lower in degree than that prescribed by the Code, which is prision
correccional in its minimum and medium periods ranging from six (6) months and one (1)
day to four (4) years and two (2) months.
Accordingly, in Criminal Case No. 03-215332, the CA correctly imposed the indeterminate
penalty of four (4) years and two (2) months of prision correccional, as minimum, to eleven
(11) years, eight (8) months and twenty-one (21) days of prision mayor, as maximum.
WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Decision of
the Court of Appeals dated June 28, 2007 and its Resolution dated September 12, 2007, in
CA-G.R. CR No. 29898, are AFFIRMED.
SO ORDERED.
G.R. No. 169076 January 23, 2007
PEOPLE OF THE PHILIPPINES, Appellee,
vs.
JOSEPH JAMILOSA, Appellant.
DECISION
245
CALLEJO, SR., J.:
This is an appeal from the Decision1 of the Regional Trial Court (RTC) of Quezon City in
Criminal Case No. Q-97-72769 convicting appellant Joseph Jamilosa of large scale illegal
recruitment under Sections 6 and 7 of Republic Act (R.A.) No. 8042, and sentencing him to
life imprisonment and to pay a P500,000.00 fine.
The Information charging appellant with large scale illegal recruitment was filed by the Senior
State Prosecutor on August 29, 1997. The inculpatory portion of the Information reads:
That sometime in the months of January to February, 1996, or thereabout in the City of
Quezon, Metro Manila, Philippines, and within the jurisdiction of this Honorable Court,
representing to have the capacity, authority or license to contract, enlist and deploy or
transport workers for overseas employment, did then and there, willfully, unlawfully and
criminally recruit, contract and promise to deploy, for a fee the herein complainants, namely,
Haide R. Ruallo, Imelda D. Bamba, Geraldine M. Lagman and Alma E. Singh, for work or
employment in Los Angeles, California, U.S.A. in Nursing Home and Care Center without first
obtaining the required license and/or authority from the Philippine Overseas Employment
Administration (POEA).
Contrary to law. 2 by profession. In the morning of January 22, 1996, she went to SM North EDSA, Quezon City
On arraignment, the appellant, assisted by counsel, pleaded not guilty to the charge.
The case for the prosecution, as synthesized by the Court of Appeals (CA), is as follows:
The prosecution presented three (3) witnesses, namely: private complainants Imelda D.
Bamba, Geraldine M. Lagman and Alma E. Singh.
Witness Imelda D. Bamba testified that on January 17, 1996, she met the appellant in Cubao,
Quezon City on board an aircon bus. She was on her way to Shoemart (SM), North EDSA,
Quezon City where she was working as a company nurse. The appellant was seated beside
her and introduced himself as a recruiter of workers for employment abroad. The appellant
told her that his sister is a head nurse in a nursing home in Los Angeles, California, USA and
he could help her get employed as a nurse at a monthly salary of Two Thousand US Dollars
($2,000.00) and that she could leave in two (2) weeks time. He further averred that he has
connections with the US Embassy, being a US Federal Bureau of Investigation (FBI) agent on
official mission in the Philippines for one month. According to the appellant, she has to pay
the amount of US$300.00 intended for the US consul. The appellant gave his pager number
and instructed her to contact him if she is interested to apply for a nursing job abroad.
On January 21, 1996, the appellant fetched her at her office. They then went to her house
where she gave him the photocopies of her transcript of records, diploma, Professional
Regulatory Commission (PRC) license and other credentials. On January 28 or 29, 1996, she
handed to the appellant the amount of US$300.00 at the McDonalds outlet in North EDSA,
Quezon City, and the latter showed to her a photocopy of her supposed US visa. The appellant
likewise got several pieces of jewelry which she was then selling and assured her that he
would sell the same at the US embassy. However, the appellant did not issue a receipt for the
said money and jewelry. Thereafter, the appellant told her to resign from her work at SM
because she was booked with Northwest Airlines and to leave for Los Angeles, California, USA
on February 25, 1996.
The appellant promised to see her and some of his other recruits before their scheduled
departure to hand to them their visas and passports; however, the appellant who was
supposed to be with them in the flight failed to show up. Instead, the appellant called and
informed her that he failed to give the passport and US visa because he had to go to the
province because his wife died. She and her companions were not able to leave for the United
States. They went to the supposed residence of the appellant to verify, but nobody knew him
or his whereabouts. They tried to contact him at the hotel where he temporarily resided, but
to no avail. They also inquired from the US embassy and found out that there was no such
person connected with the said office. Thus, she decided to file a complaint with the National
Bureau of Investigation (NBI).
Prosecution witness Geraldine Lagman, for her part, testified that she is a registered nurse
to visit her cousin Imelda Bamba. At that time, Bamba informed her that she was going to
meet the appellant who is an FBI agent and was willing to help nurses find a job abroad.
Bamba invited Lagman to go with her. On the same date at about 2:00 o’clock in the
afternoon, she and Bamba met the appellant at the SM Fast-Food Center, Basement, North
EDSA, Quezon City. The appellant convinced them of his ability to send them abroad and told
them that he has a sister in the United States. Lagman told the appellant that she had no
working experience in any hospital but the appellant assured her that it is not necessary to
have one. The appellant asked for US$300.00 as payment to secure an American visa and an
additional amount of Three Thousand Four Hundred Pesos (P3,400.00) as processing fee for
other documents.
On January 24, 1996, she and the appellant met again at SM North EDSA, Quezon City
wherein she handed to the latter her passport and transcript of records. The appellant
promised to file the said documents with the US embassy. After one (1) week, they met again
at the same place and the appellant showed to her a photocopy of her US visa. This prompted
her to give the amount of US$300.00 and two (2) bottles of Black Label to the appellant. She
gave the said money and liquor to the appellant without any receipt out of trust and after the
appellant promised her that he would issue the necessary receipt later. The appellant even
went to her house, met her mother and uncle and showed to them a computer printout from
Northwest Airlines showing that she was booked to leave for Los Angeles, California, USA on
February 25, 1996.
246
Four days after their last meeting, Extelcom, a telephone company, called her because her
number was appearing in the appellant’s cellphone documents. The caller asked if she knew
him because they were trying to locate him, as he was a swindler who failed to pay his
telephone bills in the amount of P100,000.00. She became suspicious and told Bamba about
the matter. One (1) week before her scheduled flight on February 25, 1996, they called up
the appellant but he said he could not meet them because his mother passed away. The
appellant never showed up, prompting her to file a complaint with the NBI for illegal
recruitment.
Lastly, witness Alma Singh who is also a registered nurse, declared that she first met the
appellant on February 13, 1996 at SM North EDSA, Quezon City when Imelda Bamba
introduced the latter to her. The appellant told her that he is an undercover agent of the FBI
and he could fix her US visa as he has a contact in the US embassy. The appellant told her
that he could help her and her companions Haidee Raullo, Geraldine Lagman and Imelda
Bamba find jobs in the US as staff nurses in home care centers.
On February 14, 1996 at about 6:30 in the evening, the appellant got her passport and
picture. The following day or on February 15, 1996, she gave the appellant the amount of
US$300.00 and a bottle of cognac as "grease money" to facilitate the processing of her visa.
When she asked for a receipt, the appellant assured her that there is no need for one because
she was being directly hired as a nurse in the United States.
She again met the appellant on February 19, 1996 at the Farmers Plaza and this time, the
appellant required her to submit photocopies of her college diploma, nursing board certificate
and PRC license. To show his sincerity, the appellant insisted on meeting her father. They
then proceeded to the office of her father in Barrio Ugong, Pasig City and she introduced the
appellant. Thereafter, the appellant asked permission from her father to allow her to go with
him to the Northwest Airlines office in Ermita, Manila to reserve airline tickets. The appellant
was able to get a ticket confirmation and told her that they will meet again the following day
for her to give P10,000.00 covering the half price of her plane ticket. Singh did not meet the
appellant as agreed upon. Instead, she went to Bamba to inquire if the latter gave the
appellant the same amount and found out that Bamba has not yet given the said amount.
They then paged the appellant through his beeper and told him that they wanted to see him.
However, the appellant avoided them and reasoned out that he could not meet them as he
had many things to do. When the appellant did not show up, they decided to file a complaint
for illegal recruitment with the NBI.
The prosecution likewise presented the following documentary evidence:
Exh. "A" – Certification dated February 23, 1998 issued by Hermogenes C. Mateo, Director II,
Licensing Branch, POEA.
Exh. "B" – Affidavit of Alma E. Singh dated February 23, 1996.3
On the other hand, the case for the appellant, as culled from his Brief, is as follows:
Accused JOSEPH JAMILOSA testified on direct examination that he got acquainted with Imelda
Bamba inside an aircon bus bound for Caloocan City when the latter borrowed his cellular
phone to call her office at Shoe Mart (SM), North Edsa, Quezon City. He never told Bamba
that he could get her a job in Los Angeles, California, USA, the truth being that she wanted
to leave SM as company nurse because she was having a problem thereat. Bamba called him
up several times, seeking advice from him if Los Angeles, California is a good place to work
as a nurse. He started courting Bamba and they went out dating until the latter became his
girlfriend. He met Geraldine Lagman and Alma Singh at the Shoe Mart (SM), North Edsa,
Quezon City thru Imelda Bamba. As complainants were all seeking advice on how they could
apply for jobs abroad, lest he be charged as a recruiter, he made Imelda Bamba, Geraldine
Lagman and Alma Singh sign separate certifications on January 17, 1996 (Exh. "2"), January
22, 1996 (Exh. "4"), and February 19, 1996 (Exh. "3"), respectively, all to the effect that he
never recruited them and no money was involved. Bamba filed an Illegal Recruitment case
against him because they quarreled and separated. He came to know for the first time that
charges were filed against him in September 1996 when a preliminary investigation was
conducted by Fiscal Dañosos of the Department of Justice. (TSN, October 13, 1999, pp. 3-9
and TSN, December 8, 1999, pp. 2-9)4
On November 10, 2000, the RTC rendered judgment finding the accused guilty beyond
reasonable doubt of the crime charged.5 The fallo of the decision reads:
WHEREFORE, judgment is hereby rendered finding accused guilty beyond reasonable doubt
of Illegal Recruitment in large scale; accordingly, he is sentenced to suffer the penalty of life
imprisonment and to pay a fine of Five Hundred Thousand Pesos (P500,000.00), plus costs.
Accused is ordered to indemnify each of the complainants, Imelda Bamba, Geraldine Lagman
and Alma Singh the amount of Three Hundred US Dollars ($300.00).
SO ORDERED.6
In rejecting the defenses of the appellant, the trial court declared:
To counter the version of the prosecution, accused claims that he did not recruit the
complainants for work abroad but that it was they who sought his advice relative to their
desire to apply for jobs in Los Angeles, California, USA and thinking that he might be charged
as a recruiter, he made them sign three certifications, Exh. "2," "3" and "4," which in essence
state that accused never recruited them and that there was no money involved.
Accused’s contention simply does not hold water. Admittedly, he executed and submitted a
counter-affidavit during the preliminary investigation at the Department of Justice, and that
he never mentioned the aforesaid certifications, Exhibits 2, 3 and 4 in said counter-affidavit.
These certifications were allegedly executed before charges were filed against him. Knowing
247
that he was already being charged for prohibited recruitment, why did he not bring out these
certifications which were definitely favorable to him, if the same were authentic. It is so
contrary to human nature that one would suppress evidence which would belie the charge
against him.
Denials of the accused can not stand against the positive and categorical narration of each
complainant as to how they were recruited by accused who had received some amounts from
them for the processing of their papers. Want of receipts is not fatal to the prosecution’s case,
for as long as it has been shown, as in this case, that accused had engaged in prohibited
recruitment. (People v. Pabalan, 262 SCRA 574).
That accused is neither licensed nor authorized to recruit workers for overseas employment,
is shown in the Certification issued by POEA, Exh. "A."
In fine, the offense committed by the accused is Illegal Recruitment in large scale, it having
been committed against three (3) persons, individually.7
Appellant appealed the decision to this Court on the following assignment of error:
THE TRIAL COURT ERRED IN CONVICTING ACCUSED-APPELLANT OF THE CRIME OF ILLEGAL
RECRUITMENT IN LARGE SCALE DESPITE THE FACT THAT THE LATTER’S GUILT WAS NOT
PROVED BEYOND REASONABLE DOUBT BY THE PROSECUTION.8
According to appellant, the criminal Information charging him with illegal recruitment
specifically mentioned the phrase "for a fee," and as such, receipts to show proof of payment
are indispensable. He pointed out that the three (3) complaining witnesses did not present
even one receipt to prove the alleged payment of any fee. In its eagerness to cure this "patent
flaw," the prosecution resorted to presenting the oral testimonies of complainants which were
"contrary to the ordinary course of nature and ordinary habits of life [under Section 3(y), Rule
131 of the Rules on Evidence] and defied credulity." Appellant also pointed out that
complainants’ testimony that they paid him but no receipts were issued runs counter to the
presumption under Section [3](d), Rule 131 of the Rules on Evidence that persons take
ordinary care of their concern. The fact that complainants were not able to present receipts
lends credence to his allegation that it was they who sought advice regarding their desire to
apply for jobs in Los Angeles, California, USA. Thus, thinking that he might be charged as a
recruiter, he made them sign three (3) certifications stating that he never recruited them and
there was no money involved. On the fact that the trial court disregarded the certifications
due to his failure to mention them during the preliminary investigation at the Department of
Justice (DOJ), appellant pointed out that there is no provision in the Rules of Court which bars
the presentation of evidence during the hearing of the case in court. He also pointed out that
the counter-affidavit was prepared while he was in jail "and probably not assisted by a
lawyer."9
Appellee, through the Office of the Solicitor General (OSG), countered that the absence of
receipts signed by appellant acknowledging receipt of the money and liquor from the
complaining witnesses cannot defeat the prosecution and conviction for illegal recruitment.
The OSG insisted that the prosecution was able to prove the guilt of appellant beyond
reasonable doubt via the collective testimonies of the complaining witnesses, which the trial
court found credible and deserving of full probative weight. It pointed out that appellant failed
to prove any ill-motive on the part of the complaining witnesses to falsely charge him of illegal
recruitment.
On appellant’s claim that the complaining witness Imelda Bamba was his girlfriend, the OSG
averred:
Appellant’s self-serving declaration that Imelda is his girlfriend and that she filed a complaint
for illegal recruitment after they quarreled and separated is simply preposterous. No love
letters or other documentary evidence was presented by appellant to substantiate such claim
which could be made with facility. Imelda has no reason to incriminate appellant except to
seek justice. The evidence shows that Alma and Geraldine have no previous quarrel with
appellant. Prior to their being recruited by appellant, Alma and Geraldine have never met
appellant. It is against human nature and experience for private complainants to conspire and
accuse a stranger of a most serious crime just to mollify their hurt feelings. (People v. Coral,
230 SCRA 499, 510 [1994])10
The OSG posited that the appellant’s reliance on the certifications11 purportedly signed by the
complaining witnesses is misplaced, considering that the certifications are barren of probative
weight.
On February 23, 2005, the Court resolved to transfer the case to the CA. 12 On June 22, 2005,
the CA rendered judgment affirming the decision of the RTC.13
The OSG filed a Supplemental Brief, while the appellant found no need to file one.
The appeal has no merit.
Article 13(b) of the Labor Code of the Philippines defines recruitment and placement as
follows:
(b) "Recruitment and placement" refers to any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad, whether for profit or not.
Provided, That any person or entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged in recruitment and placement.
Section 6 of R.A. No. 8042 defined when recruitment is illegal:
248
SEC. 6. Definition. – For purposes of this Act, illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and
includes referring, contract services, promising or advertising for employment abroad,
whether for profit or not, when undertaken by a non-licensee or non-holder of authority
contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise
known as the Labor Code of the Philippines: Provided, That any such non-licensee or non-
holder who, in any manner, offers or promises for a fee employment abroad to two or more
persons shall be deemed so engaged. x x x
Any recruitment activities to be undertaken by non-licensee or non-holder of contracts shall
be deemed illegal and punishable under Article 39 of the Labor Code of the Philippines. 14
Illegal recruitment is deemed committed in large scale if committed against three (3) or more
persons individually or as a group.15
To prove illegal recruitment in large scale, the prosecution is burdened to prove three (3)
essential elements, to wit: (1) the person charged undertook a recruitment activity under
Article 13(b) or any prohibited practice under Article 34 of the Labor Code; (2) accused did
not have the license or the authority to lawfully engage in the recruitment and placement of
workers; and (3) accused committed the same against three or more persons individually or
as a group.16 As gleaned from the collective testimonies of the complaining witnesses which
the trial court and the appellate court found to be credible and deserving of full probative
weight, the prosecution mustered the requisite quantum of evidence to prove the guilt of
accused beyond reasonable doubt for the crime charged. Indeed, the findings of the trial
court, affirmed on appeal by the CA, are conclusive on this Court absent evidence that the
tribunals ignored, misunderstood, or misapplied substantial fact or other circumstance.
The failure of the prosecution to adduce in evidence any receipt or document signed by
appellant where he acknowledged to have received money and liquor does not free him from
criminal liability. Even in the absence of money or other valuables given as consideration for
the "services" of appellant, the latter is considered as being engaged in recruitment activities.
It can be gleaned from the language of Article 13(b) of the Labor Code that the act of
recruitment may be for profit or not. It is sufficient that the accused promises or offers for a
fee employment to warrant conviction for illegal recruitment. 17 As the Court held in People v.
Sagaydo:18
Such is the case before us. The complainants parted with their money upon the prodding and
enticement of accused-appellant on the false pretense that she had the capacity to deploy
them for employment abroad. In the end, complainants were neither able to leave for work
abroad nor get their money back.
The fact that private complainants Rogelio Tibeb and Jessie Bolinao failed to produce receipts
as proof of their payment to accused-appellant does not free the latter from liability. The
absence of receipts cannot defeat a criminal prosecution for illegal recruitment. As long as
the witnesses can positively show through their respective testimonies that the accused is the
one involved in prohibited recruitment, he may be convicted of the offense despite the
absence of receipts.19
Appellant’s reliance on the certifications purportedly signed by the complaining witnesses
Imelda Bamba, Alma Singh and Geraldine Lagman20 is misplaced. Indeed, the trial court and
the appellate court found the certifications barren of credence and probative weight. We agree
with the following pronouncement of the appellate court:
Anent the claim of the appellant that the trial court erred in not giving weight to the
certifications (Exhs. "2," "3" & "4") allegedly executed by the complainants to the effect that
he did not recruit them and that no money was involved, the same deserves scant
consideration.
The appellant testified that he was in possession of the said certifications at the time the same
were executed by the complainants and the same were always in his possession; however,
when he filed his counter-affidavit during the preliminary investigation before the Department
of Justice, he did not mention the said certifications nor attach them to his counter-
affidavit.lavvphil.net
We find it unbelievable that the appellant, a college graduate, would not divulge the said
certifications which would prove that, indeed, he is not an illegal recruiter. By failing to present
the said certifications prior to the trial, the appellant risks the adverse inference and legal
presumption that, indeed, such certifications were not genuine. When a party has it in his
possession or power to produce the best evidence of which the case in its nature is susceptible
and withholds it, the fair presumption is that the evidence is withheld for some sinister motive
and that its production would thwart his evil or fraudulent purpose. As aptly pointed out by
the trial court:
"x x x These certifications were allegedly executed before charges were filed against him.
Knowing that he was already being charged for prohibited recruitment, why did he not bring
out these certifications which were definitely favorable to him, if the same were authentic. It
is so contrary to human nature that one would suppress evidence which would belie the charge
against him." (Emphasis Ours)21
At the preliminary investigation, appellant was furnished with copies of the affidavits of the
complaining witnesses and was required to submit his counter-affidavit. The complaining
witnesses identified him as the culprit who "recruited" them. At no time did appellant present
the certifications purportedly signed by the complaining witnesses to belie the complaint
against him. He likewise did not indicate in his counter-affidavit that the complaining
witnesses had executed certifications stating that they were not recruited by him and that he
did not receive any money from any of them. He has not come forward with any valid excuse
for his inaction. It was only when he testified in his defense that he revealed the certifications
for the first time. Even then, appellant lied when he claimed that he did not submit the
249
certifications because the State Prosecutor did not require him to submit any counter-
affidavit, and that he was told that the criminal complaint would be dismissed on account of
the failure of the complaining witnesses to appear during the preliminary investigation. The
prevarications of appellant were exposed by Public Prosecutor Pedro Catral on cross-
examination, thus:
Q Mr. Witness, you said that a preliminary investigation [was] conducted by the Department
of Justice through State Prosecutor Dañosos. Right?
A Yes, Sir.
Q Were you requested to file your Counter-Affidavit?
A Yes, Sir. I was required.
Q Did you file your Counter-Affidavit?
A Yes, Sir, but he did not accept it.
Q Why?
A Because he said "never mind" because the witness is not appearing so he dismissed the
case.
Q Are you sure that he did not accept your Counter-Affidavit, Mr. Witness?
A I don’t know of that, Sir.
Q If I show you that Counter-Affidavit you said you prepared, will you be able to identify the
same, Mr. Witness?
A Yes, Sir.
Q I will show you the Counter-Affidavit dated June 16, 1997 filed by one Joseph J. Jamilosa,
will you please go over this and tell if this is the same Counter-Affidavit you said you prepared
and you are going to file with the investigating state prosecutor?
A Yes, Sir. This the same Counter-Affidavit.
Q There is a signature over the typewritten name Joseph J. Jamilosa, will you please go over
this and tell this Honorable Court if this is your signature, Mr. Witness?
A Yes, Sir. This is my signature.
Q During the direct examination you were asked to identify [the] Certification as Exh. "2"
dated January 17, 1996, allegedly issued by Bamba, one of the complainants in this case,
when did you receive this Certification issued by Imelda Bamba, Mr. Witness?
A That is the date, Sir.
Q You mean the date appearing in the Certification.
A Yes, Sir.
Q Where was this handed to you by Imelda Bamba, Mr. Witness?
A At SM North Edsa, Sir.
Q During the direct examination you were also asked to identify a Certification Exh. "3" for
the defense dated February 19, 1996, allegedly issued by Alma Singh, one of the complainants
in this case, will you please go over this and tell us when did Alma Singh allegedly issue to
you this Certification?
A On February 19, 1996, Sir.
Q And also during the direct examination, you were asked to identify a Certification which
was already marked as Exh. "4" for the defense dated January 22, 1996 allegedly issued by
Geraldine M. Lagman, one of the complainants in this case, will you please tell the court when
did Geraldine Lagman give you this Certification?
A January 22, 1996, Sir.
Q During that time, January 22, 1996, January 17, 1996 and February 19, 1996, you were in
possession of all these Certification. Correct, Mr. Witness?
A Yes, Sir.
Q These were always in your possession. Right?
A Yes, Sir, with my papers.
Q Do you know when did the complainants file cases against you?
A I don’t know, Sir.
Q Alright. I will read to you this Counter-Affidavit of yours, and I quote "I, Joseph Jamilosa,
of legal age, married and resident of Manila City Jail, after having duly sworn to in accordance
250
with law hereby depose and states that: 1) the complainants sworn under oath to the National A No, Sir.
Bureau of Investigation that I recruited them and paid me certain sums of money assuming
that there is truth in those allegation of this (sic) complainants. The charge filed by them Q Did you go over the said resolution you said you received here?
should be immediately dismissed for certain lack of merit in their Sworn Statement to the NBI
Investigator; 2) likewise, the complainants’ allegation is not true and I never recruited them A I just learned about it now, Sir.
to work abroad and that they did not give me money, they asked me for some help so I
[helped] them in assisting and processing the necessary documents, copies for getting US
Q Did you read the content of the resolution?
Visa; 3) the complainant said under oath that they can show a receipt to prove that they can
give me sums or amount of money. That is a lie. They sworn (sic), under oath, that they can
show a receipt that I gave to them to prove that I got the money from them. I asked the A Not yet, Sir. It’s only now that I am going to read.
kindness of the state prosecutor to ask the complainants to show and produce the receipts
that I gave to them that was stated in the sworn statement of the NBI; 4) the allegation of COURT
the complainants that the charges filed by them should be dismissed because I never
[received] any amount from them and they can not show any receipt that I gave them," Q You said it was dismissed. Correct?
Manila City Jail, Philippines, June 16, 1997. So, Mr. Witness, June 16, 1997 is the date when
you prepared this. Correct? A Yes, Your Honor.

A Yes, Sir. Q Did you receive a resolution of this dismissal?

Q Now, my question to you, Mr. Witness, you said that you have with you all the time the A No, Your Honor.
Certification issued by [the] three (3) complainants in this case, did you allege in your
Counter-Affidavit that this Certification you said you claimed they issued to you? FISCAL CATRAL

A I did not say that, Sir. Q What did you receive?

Q So, it is not here in your Counter-Affidavit? A I did not receive any resolution, Sir. It’s just now that I learned about the finding.

A None, Sir. Q You said you learned here in court, did you read the resolution filed against you, Mr.
Witness?
Q What is your educational attainment, Mr. Witness?
A I did not read it, Sir.
A I am a graduate of AB Course Associate Arts in 1963 at the University of the East.
Q Did you read by yourself the resolution made by State Prosecutor Dañosos, Mr. Witness?
Q You said that the State Prosecutor of the Department of Justice did not accept your Counter-
Affidavit, are you sure of that, Mr. Witness? A Not yet, Sir.

A Yes, Sir. Q What did you take, if any, when you received the subpoena from this court?

Q Did you receive a copy of the dismissal which you said it was dismissed? A I was in court already when I asked Atty. Usita to investigate this case.

A No, Sir. I did not receive anything. Q You said a while ago that your Affidavit was not accepted by State Prosecutor Dañosos. Is
that correct?
Q Did you receive a resolution from the Department of Justice?

251
A Yes, Sir.
Q Will you please read to us paragraph four (4), page two (2) of this resolution of State
Prosecutor Dañosos.
(witness reading par. 4 of the resolution)
Alright. What did you understand of this paragraph 4, Mr. Witness?
A Probably, guilty to the offense charge.22
It turned out that appellant requested the complaining witnesses to sign the certifications
merely to prove that he was settling the cases:
COURT
Q These complainants, why did you make them sign in the certifications?
A Because one of the complainants told me to sign and they are planning to sue me.
Q You mean they told you that they are filing charges against you and yet you [made] them
sign certifications in your favor, what is the reason why you made them sign?
A To prove that I’m settling this case.
Q Despite the fact that they are filing cases against you and yet you were able to make them
sign certifications?
A Only one person, Your Honor, who told me and he is not around.
Q But they all signed these three (3) certifications and yet they filed charges against you and
yet you made them sign certifications in your favor, so what is the reason why you made
them sign?
(witness can not answer)23
The Court notes that the trial court ordered appellant to refund US$300.00 to each of the
complaining witnesses. The ruling of the appellate court must be modified. Appellant must
pay only the peso equivalent of US$300.00 to each of the complaining witnesses.
IN LIGHT OF ALL THE FOREGOING, the appeal is DISMISSED. The Decision of the Court of
Appeals affirming the conviction of Joseph Jamilosa for large scale illegal recruitment under
Sections 6 and 7 of Republic Act No. 8042 is AFFIRMED WITH MODIFICATION. The appellant
is hereby ordered to refund to each of the complaining witnesses the peso equivalent of
US$300.00. Costs against appellant.
SO ORDERED.
G.R. No. 171644 November 23, 2011
DELIA D. ROMERO, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, ROMULO pADLAN and ARTURO SIAPNO, Respondents.
DECISION
PERALTA, J.:
This is to resolve the Petition for Review on Certiorari1 dated March 25, 2006 of petitioner
Delia D. Romero assailing the Decision 2 dated July 18, 2005 and Resolution3 dated February
13, 2006 of the Court of Appeals (CA), affirming the Decision 4 dated February 24, 2004 of the
Regional Trial Court (RTC), Branch 44, Dagupan City, finding petitioner guilty beyond
reasonable doubt of the crime of Illegal Recruitment as defined in paragraph (a) of Article 38
of Presidential Decree (P.D.) No. 2018.
The records contain the following antecedent facts:
Private respondent Romulo Padlan (Romulo) was a former classmate of petitioner in college.
Sometime in September 2000 Romulo went to petitioner's stall (wedding gown rentals) at W.
A. Jones St., Calasiao, Pangasinan to inquire about securing a job in Israel. Convinced by
petitioner's words of encouragement and inspired by the potential salary of US$700.00 to
US$1,200.00 a month, Romulo asked petitioner the amount of money required in order for
him to be able to go to Israel. Petitioner informed him that as soon as he could give her
US$3,600.00, his papers would be immediately processed. To raise the amount, Romulo
secured a loan from a bank and borrowed some more from his friends. When he was able to
raise the amount, Romulo went back to petitioner and handed her the money. Petitioner
contacted Jonney Erez Mokra who instructed Romulo to attend a briefing at his (Jonney's)
house in Dau, Mabalacat, Pampanga. Romulo was able to leave for Israel on October 26, 2000
and was able to secure a job with a monthly salary of US$650.00. Unfortunately, after two
and a half months, he was caught by Israel's immigration police and detained for 25 days. He
was subsequently deported because he did not possess a working visa. On his return, Romulo
demanded from petitioner the return of his money, but the latter refused and failed to do so.
On the other hand, private respondent Arturo Siapno is petitioner's nephew. Sometime in
August 2000, he went to petitioner's stall. He was convinced by the petitioner that if he could
give her US$3,600.00 for the processing of his papers, he could leave the country within 1 to
2 weeks for a job placement in Israel. Arturo contacted a relative in the U.S. to ask the latter
252
to cover the expenses for the former's overseas job placement. The relative sent the
US$3,000.00 to Teresita D. Visperas, petitioner's sister in Israel. Petitioner processed Arturo's
papers and contacted Jonney Erez Mokra. Jonney instructed Arturo to attend a briefing in
Dau, Mabalacat, Pampanga. Afterwards, Arturo left for Israel sometime in September 2000.
He was able to work and receive US$800.00 salary per month. After three months of stay in
Israel, he was caught by the immigration officials, incarcerated for ten days and was
eventually deported. After arriving in the country, Arturo immediately sought the petitioner.
Petitioner promised him that she would send him back to Israel, which did not happen.
Arturo, after learning that Romulo suffered the same fate, checked with the Department of
Labor and Employment (DOLE) Dagupan District Office whether petitioner, Teresita D.
Visperas and Jonney Erez Mokra had any license or authority to recruit employees for overseas
employment. Finding that petitioner and the others were not authorized to recruit for overseas
employment, Arturo and Romulo filed a complaint against petitioner, Teresita and Jonney
before the National Bureau of Investigation (NBI).
Consequently, an Information dated June 18, 2001 was filed against petitioner and Jonney
Erez Mokra for the crime of Illegal Recruitment which reads as follows:
That sometime in the month of August and September 2000 in the Municipality of Calasiao,
Province of Pangasinan, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused, not being licensee or holder of authority, conspiring, confederating
and mutually helping one another, did then and there, wilfully, unlawfully and feloniously
undertake and perform recruitment activity by recruiting ARTURO SIAPNO and ROMULO
PADLAN to a supposed job abroad particularly in Israel, for a fee, without first securing the
necessary license and permit to do the same.
CONTRARY to Art. 38 (a) of P.D. 442, as amended by P.D. 2018.
Upon arraignment on August 20, 2001, petitioner, with the assistance of her counsel pleaded
not guilty, whereas accused Jonney Erez Mokra was and is still at-large. Thereafter, trial on
the merits ensued.
To establish the facts earlier mentioned, the prosecution presented the testimonies of Romulo
Padlan and Arturo Siapno. Petitioner, on the other hand, offered her own testimony, as well
as Satchi Co Pontace’s to prove that petitioner did not recruit the private respondents.
According to petitioner, private respondents went to her to inquire about the working status
of her sister in Israel. She told them that her sister was doing well. When private respondents
asked her how her sister was able to go to Israel, petitioner told them that she does not know
and that she will have to ask her sister about that matter. Petitioner then called her sister
and told her that the private respondents wanted to ask for her help in going to Israel. It was
petitioner's sister and the private respondents who communicated with each other, and the
petitioner had no knowledge as to the content of the former's conversations and agreements.
The RTC found petitioner guilty as charged. The dispositive portion of its decision reads as
follows:
WHEREFORE, the Court finds accused Delia Romero guilty beyond reasonable doubt of the
crime of Illegal Recruitment as defined in paragraph (a) of Article 38 of Presidential Decree
No. 442, as amended by Presidential Decree No. 2018, and pursuant to law hereby sentences
accused Delia Romero to suffer the penalty of Eight (8) Years and a fine of ₱100,000.00 plus
costs.
Accused Delia Romero is directed to return the amount of $3,600.00 or its equivalent to
complainant Romulo Padlan and the amount of $3,600.00 or its equivalent to Arturo Siapno.
The case as against Jonney Mokra aka Erez, is hereby ordered archived subject to
reinstatement upon his arrest.
SO ORDERED.
On appeal, the CA affirmed in toto the decision of the RTC, the fallo of which states:
WHEREFORE, premises considered, the appealed Decision is AFFIRMED in toto.
SO ORDERED.
Hence, the present petition after petitioner's motion for reconsideration was denied by the
CA. Petitioner enumerates the following assignment of errors:
First Assignment of Error
The Court of Appeals erred in affirming the conviction of the accused of the offense charged
(Illegal Recruitment) for said finding is contrary to law and evidence in record.
Second Assignment of Error
The Court of Appeals erred in affirming the conviction of the accused in interpreting the
gesture of good faith of the petitioner as referral in the guise of illegal recruitment.
Third Assignment of Error
The Court of Appeals erred in affirming the conviction of the accused based merely on a
certification from the DOLE-Dagupan District Office without said certification being properly
identified and testified thereto.
Fourth Assignment of Error
253
The Court of Appeals erred in affirming the conviction of accused based on speculations and
probabilities and not on the evidence on record.
Fifth Assignment of Error
The Court of Appeals erred in not acquitting the accused on the ground of reasonable doubt.
Illegal recruitment is defined in Article 38 of the Labor Code, as amended, as follows:
ART. 38. Illegal Recruitment. - (a) Any recruitment activities, including the prohibited
practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or
non-holders of authority, shall be deemed illegal and punishable under Article 39 of this Code.
The [Department] of Labor and Employment or any law enforcement officer may initiate
complaints under this Article.
(b) Illegal recruitment when committed by a syndicate or in large scale shall be considered
an offense involving economic sabotage and shall be penalized in accordance with Article 39
hereof.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3)
or more persons conspiring and/or confederating with one another in carrying out any
unlawful or illegal transaction, enterprise or scheme defined under the first paragraph hereof.
Illegal recruitment is deemed committed in large scale if committed against three (3) or more
persons individually or as a group.
Article 13 (b) of the same Code defines, "recruitment and placement" as: "any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and
includes referrals, contract services, promising or advertising for employment, locally or
abroad, whether for profit or not: Provided, that any person or entity which, in any manner,
offers or promises for a fee, employment to two or more persons shall be deemed engaged
in recruitment and placement."
The crime of illegal recruitment is committed when two elements concur, namely: (1) the
offender has no valid license or authority required by law to enable one to lawfully engage in
recruitment and placement of workers; and (2) he undertakes either any activity within the
meaning of "recruitment and placement" defined under Article 13 (b), or any prohibited
practices enumerated under Article 34 of the Labor Code.5
In disputing the absence of the first element, petitioner offers her opinion that the CA erred
in affirming the trial court's reliance on a mere certification from the DOLE Dagupan District
Office that she does not have the necessary licence to recruit workers for abroad. She claims
that the prosecution committed a procedural lapse in not procuring a certification from the
agency primarily involved, the Philippine Overseas Employment Administration (POEA). The
said argument, however, is flawed.
Under the first element, a non-licensee or non-holder of authority is any person, corporation
or entity which has not been issued a valid license or authority to engage in recruitment and
placement by the Secretary of Labor, or whose license or authority has been suspended,
revoked or cancelled by the POEA or the Secretary. 6 Clearly, the creation of the POEA did not
divest the Secretary of Labor of his/her jurisdiction over recruitment and placement of
activities. The governing rule is still Article 35 7 of the Labor Code. This is further discussed in
this Court's ruling in Trans Action Overseas Corp. v. Secretary of Labor,8 wherein it was ruled
that:
In the case of Eastern Assurance and Surety Corp. v. Secretary of Labor, we held that:
The penalties of suspension and cancellation of license or authority are prescribed for
violations of the above-quoted provisions, among others. And the Secretary of Labor has the
power under Section 35 of the law to apply these sanctions, as well as the authority, conferred
by Section 36, not only to "restrict and regulate the recruitment and placement activities of
all agencies," but also to "promulgate rules and regulations to carry out the objectives and
implement the provisions" governing said activities. Pursuant to this rule-making power thus
granted, the Secretary of Labor gave the POEA, on its own initiative or upon a filing of a
complaint or report or upon request for investigation by any aggrieved person, "xxx (authority
to) conduct the necessary proceedings for the suspension or cancellation of the license or
authority of any agency or entity" for certain enumerated offenses including -
1) the imposition or acceptance, directly or indirectly, of any amount of money, goods or
services, or any fee or bond in excess of what is prescribed by the Administration, and
2) any other violation of pertinent provisions of the Labor Code and other relevant laws, rules
and regulations.
The Administrator was also given the power to "order the dismissal of the case or the
suspension of the license or authority of the respondent agency or contractor or recommend
to the Minister the cancellation thereof."
This power conferred upon the Secretary of Labor and Employment was echoed in People v.
Diaz, viz.:
A non-licensee or non-holder of authority means any person, corporation or entity which has
not been issued a valid license or authority to engage in recruitment and placement by the
Secretary of Labor, or whose license or authority has been suspended, revoked or cancelled
by the POEA or the Secretary.9
Thus, the trial court did not err in considering the certification from the DOLE-Dagupan District
Office stating that petitioner has not been issued any license by the POEA nor is a holder of
an authority to engage in recruitment and placement activities. The Office of the Solicitor
254
General (OSG), in its Comment10 dated October 9, 2006, also gives a valid observation as to A: I inquired from her and she responded with me with sweet words, sir.
the admissibility of the certification as evidence for the prosecution, thus:
Q: What did you ask her when you first met her in her stall [in] September 2000?
x x x Notably, there is nothing on record to show that petitioner objected to the admissibility
of the certification for the purpose for which it was offered. Thus, petitioner's argument that A: I asked her about the possible placement and the condition about the job in Israel.
the certification was inadmissible because it was not properly identified by the issuing officer
should be rejected. It is well-settled that "[e]very objections to the admissibility of evidence Q: And what was her response?
shall be made at the time such evidence is offered or as soon thereafter as the ground for
objection shall have become apparent, otherwise the objection shall be considered waived."
A: Her response was positive and very encouraging, sir.
Accordingly, the certification has been accepted as admissible by the trial court and properly
considered as evidence for the party who submitted it.11
Q: What was the very good and very encouraging response of the accused?
Anent the second element, petitioner insists that the CA was wrong in affirming the factual
findings of the trial court. According to her, the accommodation extended by the petitioner to A: Regarding the salary amounting to $700.00 to $1,000.00 dollars a month, sir.
the private respondents is far from the referral as contemplated in Article 13 (b) of the Labor
Code. Q: When you were informed that the salary is quite good in Israel, what did you do, if any?

It is a settled rule that factual findings of the trial courts, including their assessment of the A: I planned to produce money so that I can apply for Israel, sir.
witnesses' credibility, are entitled to great weight and respect by the Supreme Court,
particularly when the CA affirmed such findings.12 After all, the trial court is in the best position Q: And what transpired next after that?
to determine the value and weight of the testimonies of witnesses. 13
A: She told me that, "If you can produce $3,600.00 dollars then I will begin to process your
Nevertheless, the testimonies of the private respondents clearly establish the fact that papers.
petitioner's conduct falls within the term recruitment as defined by law. As testified by Romulo
Padlan, petitioner convinced him and Arturo Siapno to give her US$3,600.00 for the Q: After telling you that, what did you do, if any?
processing of their papers, thus:
A: So I planned to have a loan [from] Rural Bank of Central Pangasinan and borrow some
Q: In September 2000, did you see the accused? money [from] my other friends, sir.

A: There was, sir. xxxx

Q: Where did you see each other? Q: After producing that money, what did you do?

A: At her stall, sir. xxxx

xxxx A: I [went] to her stall [in] September 26 around 10:00 P.M. and handed the money to Mrs.
Delia Romero, sir.
Q: What was your purpose in going to her stall?
xxxx
A: My purpose is to inquire about my application to Israel, sir.
Q: How much money did you give to the accused [in] September 2000?
Q: What happened when you inquired from her about your application in going to Israel?
A: [In] September 2000, I gave her $1,500.00 US dollars, sir.14
255
Arturo Siapno also testified as to how petitioner convinced him to apply for a job in Israel and
offered her services for a fee, thus:
Q: [I]n August 2000, where were you?
A: I was residing in Puelay-Carangalaan. Dagupan City.
Q: On the same month, did you have any transaction with the accused?
A: Yes sir[.] I met the accused at the appliance store which is located at Puelay and she
offered me a job in Israel.
Q: [When] she offered you a job in Israel, what did you do?
A: I went to their stall which is located [in] Calasiao, and in the same place I also met several
applicants.
Q: When did you go to the stall of the accused?
A: The following day, sir.
xxxx
Q: And what did you do at the stall of the accused in Calasiao, Pangasinan?
A: When I went to the stall of the accused, since I saw other applicants, I was convinced to
apply and I called up my aunt and asked for help.
Q: Since you were at the stall of the accused in Calasiao, what transpired next?
A: When I talked to her, she told me if I have a money of ₱3,600.00 I could easily depart
within one (1) week or two (2) weeks.15
From the above testimonies, it is apparent that petitioner was able to convince the private
respondents to apply for work in Israel after parting with their money in exchange for the
services she would render. The said act of the petitioner, without a doubt, falls within the
meaning of recruitment and placement as defined in Article 13 (b) of the Labor Code.
As to petitioner's contention that the testimony of Arturo Siapno that the latter paid a certain
amount of money to the former must not be given any credence due to the absence of any
receipt or any other documentary evidence proving such, the same is without any merit. In
People v. Alvarez,16 this Court ruled that in illegal recruitment cases, the failure to present
receipts for money that was paid in connection with the recruitment process will not affect
the strength of the evidence presented by the prosecution as long as the payment can be
proved through clear and convincing testimonies of credible witnesses. It was discussed that:
In illegal recruitment, mere failure of the complainant to present written receipts for money
paid for acts constituting recruitment activities is not fatal to the prosecution, provided the
payment can be proved by clear and convincing testimonies of credible witnesses.
xxxx
x x x The Court has already ruled that the absence of receipts in a case for illegal recruitment
is not fatal, as long as the prosecution is able to establish through credible testimonial
evidence that accused-appellant has engaged in illegal recruitment. Such case is made, not
by the issuance or the signing of receipts for placement fees, but by engagement in
recruitment activities without the necessary license or authority.
In People v. Pabalan, the Court held that the absence of receipts for some of the amounts
delivered to the accused did not mean that the appellant did not accept or receive such
payments. Neither in the Statute of Frauds nor in the rules of evidence is the presentation of
receipts required in order to prove the existence of a recruitment agreement and the
procurement of fees in illegal recruitment cases. Such proof may come from the testimonies
of witnesses.17
With regard to the penalty imposed by the RTC and affirmed by the CA, this Court finds it to
be inappropriate. The trial court imposed the penalty of eight (8) years imprisonment and a
fine of ₱100,000.00 plus cost and ordered petitioner to return the amount of US$3,600.00 or
its equivalent to Romulo Padlan and the amount of US$3,600.00 or its equivalent to Arturo
Siapno. Under Article 39 (c) of the Labor Code, which prescribes the penalty for illegal
recruitment, any person who is neither a licensee nor a holder of authority under the law and
found violating any provision thereof or its implementing rules and regulations shall, upon
conviction thereof, suffer the penalty of imprisonment of not less than four (4) years but not
more than eight (8) years or a fine of not less than ₱20,000.00 nor more than ₱100,000.00
or both such imprisonment and fine, at the discretion of the court. Clearly, the trial court, by
imposing a straight penalty, disregarded the application of the Indeterminate Sentence Law. 18
In Argoncillo v. Court of Appeals,19 this Court ruled that the application of the Indeterminate
Sentence Law is mandatory to both the Revised Penal Code and the special laws, and in the
same ruling, this Court summarized the application and non-application of the Indeterminate
Sentence Law, to wit:
x x x It is basic law that x x x the application of the Indeterminate Sentence Law is mandatory
where imprisonment exceeds one (1) year, except only in the following cases:
a. Offenses punished by death or life imprisonment.
b. Those convicted of treason (Art. 114) conspiracy or proposal to commit treason (Art. 115).
256
c. Those convicted of misprision of treason (Art. 116), rebellion (Art. 134), sedition (Art. 139)
or espionage (Art. 117).
d. Those convicted of piracy (Art. 122).
e. Habitual delinquents (Art. 62, par. 5).
Recidivists are entitled to an Indeterminate sentence. (People v. Jaramilla, L-28547, February
22, 1974) Offender is not disqualified to avail of the benefits of the law even if the crime is
committed while he is on parole. (People v. Calreon, CA 78 O. G. 6701, November 19, 1982).
f. Those who escaped from confinement or those who evaded sentence.
g. Those granted conditional pardon and who violated the terms of the same. (People v.
Corral, 74 Phil. 359).
h. Those whose maximum period of imprisonment does not exceed one (1) year.
Where the penalty actually imposed does not exceed one (1) year, the accused cannot avail
himself of the benefits of the law, the application of which is based upon the penalty actually
imposed in accordance with law and not upon that which may be imposed in the discretion of
the court. (People v. Hidalgo, [CA] G.R. No. 00452-CR, January 22, 1962).
i. Those who are already serving final judgment upon the approval of the Indeterminate
Sentence Law.
The need for specifying the minimum and maximum periods of the indeterminate sentence is
to prevent the unnecessary and excessive deprivation of liberty and to enhance the economic
usefulness of the accused, since he may be exempted from serving the entire sentence,
depending upon his behavior and his physical, mental, and moral record. The requirement of
imposing an indeterminate sentence in all criminal offenses whether punishable by the
Revised Penal Code or by special laws, with definite minimum and maximum terms, as the
Court deems proper within the legal range of the penalty specified by the law must, therefore,
be deemed mandatory.201âwphi1
The Indeterminate Sentence Law provides that if, as in this case, the offense is punished by
a law other than the Revised Penal Code, the court shall sentence the accused to an
indeterminate sentence, the maximum term of which shall not exceed the maximum fixed by
said law and the minimum shall not be less than the minimum term prescribed by the same.
The imposable penalty is imprisonment of not less than four (4) years but not more than eight
(8) years; hence, the proper penalty imposed should be within the range of four (4) years to
eight (8) years. Thus, applying the Indeterminate Sentence Law, the Court can impose the
minimum and maximum terms of the penalty of imprisonment within the range of four (4)
years to eight (8) years.
WHEREFORE, the Petition for Review on Certiorari dated March 25, 2006 of petitioner Delia
D. Romero is hereby DENIED. Consequently, the Decision dated July 18, 2005 and Resolution
dated February 13, 2006 of the Court of Appeals, affirming the Decision dated February 24,
2004 of the Regional Trial Court, finding petitioner guilty beyond reasonable doubt of the
crime of Illegal Recruitment as defined in paragraph (a) of Article 38 of Presidential Decree
(P.D.) No. 2018, are hereby AFFIRMED with the MODIFICATION that the penalty imposed
should be imprisonment of four (4) years, as minimum, to seven (7) years, as maximum, and
a fine of ₱100,000.00 plus cost and for petitioner to return the amount of $3,600.00 or its
equivalent to Romulo Padlan and the amount of $3,600.00 or its equivalent to Arturo Siapno.
SO ORDERED
G.R. No. 178774 December 8, 2010
PEOPLE OF THE PHILIPPINES, Appellee,
vs.
MARLYN P. BACOS, Appellant.
DECISION
BRION, J.:
For review is the decision,1 dated April 18, 2007, of the Court of Appeals (CA) in CA-G.R. CR-
H.C. No. 01713 which affirmed the decision 2 of the Regional Trial Court (RTC), Branch 79,
Quezon City, in Criminal Case No. Q-96-65212 finding Marlyn P. Bacos (appellant) guilty
beyond reasonable doubt of illegal recruitment in large scale. The RTC sentenced her to suffer
life imprisonment and to pay a fine of ₱100,000.00.
This is not the first time we have passed upon this case as we previously disposed of the
appellant’s appeal in our Resolutions dated April 14, 2010 and August 23, 2010. We are once
more passing upon this case as we committed an oversight in our previous Resolutions; one
of the justices of the Court who then participated and voted for the denial of the present
appeal was also a member of the Division that handled the case at the CA. Hence, the need
to resubmit this case for another consideration and decision, with a new Member replacing
the Justice who should not have participated in resolving this case before this Court.
The Facts
Together with her common law husband Efren Dimayuga, the appellant was charged of illegal
recruitment in large scale before the RTC, based on the complaints filed by ten (10)
257
individuals. The appellant and Dimayuga pleaded not guilty, and a joint trial ensued.
Dimayuga died during the pendency of the trial, leaving the appellant to face the charges.
Of the ten (10) complainants, only three (3) testified, namely: Cynthia Deza, Elizabeth
Paculan and Ramelo Gualvez (complainants). The complainants claimed that within the period
of December 1993 to September 1994, they met Dimayuga and the appellant at their house.
Dimayuga represented that he was a recruiter who could send them to work in Japan. The
appellant likewise assured the complainants that they (she and Dimayuga) could send them
abroad. Believing that Dimayuga was a legitimate recruiter, the complainants parted with
their money to be used as placement and processing fees. The money was given by the
complainants either to Dimayuga while in the presence of the appellant, or handed to the
appellant who gave it to Dimayuga. Dimayuga issued receipts for the money received.
The complainants were not deployed within the period promised by Dimayuga. The
complainants also discovered that Dimayuga and the appellant moved to another house.
Believing that they had been duped, the complainants and the other applicants filed
complaints for illegal recruitment against Dimayuga and the appellant before the authorities.
The prosecution presented documentary evidence consisting of two (2) Certifications (dated
December 1, 1999 and January 19, 2000) from the Philippine Overseas Employment
Administration stating that Efren Dimayuga, Marlyn P. Bacos and Marlyn Reyes y Bacos are
not authorized to recruit workers for overseas employment.
In her defense, the appellant testified that she had no participation in the transactions
between her husband and the complainants. She denied having received any money from the
complainants, and likewise denied signing any receipt for payments made. The appellant
claimed that she only served the complainants snacks whenever they came to where she and
Dimayuga then resided.
The defense presented Pulina Luching who testified that Dimayuga and the appellant were
both known to her, having lived with them for a time. The witness denied having any
knowledge of the nature of Dimayuga’s business.
The RTC Ruling
The RTC gave credence to the testimonies of the complainants, which it found to be
straightforward and consistent. The RTC observed that the appellant did not refute the
allegation that Dimayuga was engaged in the recruitment and placement business. The RTC
ruled that sufficient evidence existed establishing that the two accused conspired in engaging
in illegal recruitment activities. The RTC found that the appellant gave indispensable
assistance to Dimayuga in perpetrating the fraud by receiving the amounts of money for
placement fees and assuring the complainants that Dimayuga can deploy them for
employment abroad. Under the circumstances, the RTC ruled that the appellant’s denial
deserved little credence in light of the positive testimony coming from credible prosecution
witnesses.
The CA Ruling
The CA upheld the factual findings of the RTC on appeal. The CA ruled that all the elements
of illegal recruitment, as defined under Article 13(b) of the Labor Code in relation to Article
34 of the same Code, were sufficiently proven by the prosecution evidence. The CA held that
the appellant is liable as principal, considering that she actively participated in the recruitment
process by giving the victims the assurance that Dimayuga could deploy them for employment
abroad. The CA declared that the appellant’s acts fall within the legal definition by
enumeration of what constitutes "recruitment."
The Issues
The appellant assigns the following errors for the Court’s consideration:
(1) In finding the appellant as principal in the crime charged absent any direct and clear
evidence of her active participation in the illegal recruitment; and
(2) In the alternative, the appellant is only liable as an accomplice under the circumstances.
The Court’s Ruling
We deny the appeal and affirm the appellant’s conviction, with modification on the award of
damages.
Together with Republic Act No. 8042 (Migrant Workers and Overseas Filipinos Act of 1995),
the law governing illegal recruitment is the Labor Code which defines recruitment and
placement as "any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not." 3 The same Code also defines and
punishes Illegal recruitment. Its Articles 38 and 39 state:
Art. 38. Illegal Recruitment. –
(a) Any recruitment activities, including the prohibited practices enumerated under Article 34
of this Code, to be undertaken by non-licensees or non-holders of authority shall be deemed
illegal and punishable under Article 39 of this Code. x x x
(b) Illegal recruitment when committed by a syndicate or in large scale shall be considered
an offense involving economic sabotage and shall be penalized in accordance with Article 39
hereof.
258
x x x Illegal recruitment is deemed committed in large scale if committed against three (3) or ₱100,000.00, pursuant to the first paragraph of Article 39 of the Labor Code, as amended.
more persons individually or as a group. Committed in large scale, the illegal recruitment is deemed to constitute economic sabotage.

Art. 39. Penalties. -
(a) The penalty of life imprisonment and a fine of One Hundred Thousand Pesos (₱100,000.00)
shall be imposed if illegal recruitment constitutes economic sabotage as defined herein[.]
Applying these legal provisions to the facts, no doubt exists in our mind that the appellant
committed illegal recruitment activities together with Dimayuga. The prosecution evidence
clearly showed that despite the lack of license or authority to engage in recruitment, the
appellant admitted that she gave the complainants "assurances" that she and Dimayuga could
deploy them for employment in Japan. The complainants, in this regard, were categorical in
saying that they relied not only on the representations of Dimayuga but also on the assurances
of the appellant that they would be deployed for work in Japan.
We find as well that the CA decision should be modified by adding an award of legal interest
with respect to the complainants’ civil indemnity. The amounts of civil indemnity represent
the amount of placement fees that the complainants paid to Dimayuga and the appellant. The
legal interest of twelve percent (12%) per annum shall be imposed, reckoned from the filing
of the information until the finality of the judgment, consistent with prevailing jurisprudence. 5
WHEREFORE, premises considered, the Court resolves to:
(1) RECALL the Resolutions dated April 14, 2010 and August 23, 2010.
(2) DENY the appeal for failure to sufficiently show that a reversible error was committed by
the Court of Appeals in the assailed decision; and

We arrive at this conclusion after additionally considering the following established acts of the (3) AFFIRM with MODIFICATION the Decision of the Court of Appeals in CA-G.R. CR-H.C. No.
appellant: (a) her acceptance of the placement fee given by the complainants; (b) the fact 01713 which affirmed the decision of the Regional Trial Court, Branch 79, Quezon City, in
that she communicated to the complainants the date of their departure; and (c) her Criminal Case No. Q-96-65212, finding Marlyn P. Bacos guilty beyond reasonable doubt of
information on how the balance of the placement fee should be paid. These acts indubitably illegal recruitment in large scale. Appellant is ordered to indemnify the complainants the
show that she was engaged in illegal recruitment activities together with Dimayuga. Thus, following amounts:
the appellant’s liability under the circumstances cannot be considered as that of a mere
accomplice, but rather as a principal directly and actively engaged in illegal recruitment (a) Cynthia Deza - ₱20,000;
activities.
(b) Elizabeth Paculan - ₱10,000; and
Lastly, the appellant’s argument that she did not derive any consideration from the
transactions or that she made the assurances after Dimayuga’s representations were made
(c) Ramelo Gualvez - ₱5,000
to the complainants cannot serve to exonerate her from the crime. We emphasize that the
absence of a consideration or misrepresentations employed by the appellant is not material
in the prosecution for illegal recruitment. By its very definition, illegal recruitment is deemed representing the amounts paid by the complainants as placement fees, plus 12% legal interest
committed by the mere act of promising employment without a license or authority and per annum that shall be reckoned from the filing of the information until the finality of the
whether for profit or not. Moreover, we previously held that the time when the judgment.
misrepresentation was made, whether prior or simultaneous to the delivery of the money of
the complainants, is only material in the crime of estafa under Article 315(2)(a) of the Revised SO ORDERED.
Penal Code, as amended, and not in the crime of illegal recruitment.41avvphi1
G.R. No. 187730 June 29, 2010
For all these reasons, we affirm the CA’s finding that the appellant committed illegal
recruitment in large scale. PEOPLE OF THE PHILIPPINES, Petitioner,
vs.
The Penalty RODOLFO GALLO y GADOT, Accused-Appellant,
FIDES PACARDO y JUNGCO and PILAR MANTA y DUNGO, Accused.
The illegal recruitment having been committed against three victims is illegal recruitment in
large scale, as provided under the aforequoted Articles 38 and 39 of the Labor Code. We, DECISION
thus, likewise affirm the CA’s ruling imposing the penalty of life imprisonment and a fine of
259
VELASCO, JR., J.:
The Case
This is an appeal from the Decision1 dated December 24, 2008 of the Court of Appeals (CA)
in CA-G.R. CR-H.C. No. 02764 entitled People of the Philippines v. Rodolfo Gallo y Gadot
(accused-appellant), Fides Pacardo y Jungco and Pilar Manta y Dungo (accused), which
affirmed the Decision2 dated March 15, 2007 of the Regional Trial Court (RTC), Branch 30 in
Manila which convicted the accused-appellant Rodolfo Gallo y Gadot ("accused-appellant") of
syndicated illegal recruitment in Criminal Case No. 02-206293 and estafa in Criminal Case
No. 02-206297.
The Facts
Originally, accused-appellant Gallo and accused Fides Pacardo ("Pacardo") and Pilar Manta
("Manta"), together with Mardeolyn Martir ("Mardeolyn") and nine (9) others, were charged
with syndicated illegal recruitment and eighteen (18) counts of estafa committed against
eighteen complainants, including Edgardo V. Dela Caza ("Dela Caza"), Sandy Guantero
("Guantero") and Danilo Sare ("Sare"). The cases were respectively docketed as Criminal
Case Nos. 02-2062936 to 02-206311. However, records reveal that only Criminal Case No.
02-206293, which was filed against accused-appellant Gallo, Pacardo and Manta for
syndicated illegal recruitment, and Criminal Case Nos. 02-206297, 02-206300 and 02-
206308, which were filed against accused-appellant Gallo, Pacardo and Manta for estafa,
proceeded to trial due to the fact that the rest of the accused remained at large. Further, the
other cases, Criminal Case Nos. 02-206294 to 02-206296, 02-206298 to 02-206299, 02-
206301 to 02-206307 and 02-206309 to 02-206311 were likewise provisionally dismissed
upon motion of Pacardo, Manta and accused-appellant for failure of the respective
complainants in said cases to appear and testify during trial.
It should also be noted that after trial, Pacardo and Manta were acquitted in Criminal Case
Nos. 02-206293, 02-206297, 02-206300 and 02-206308 for insufficiency of evidence.
Likewise, accused-appellant Gallo was similarly acquitted in Criminal Case Nos. 02-206300,
the case filed by Guantero, and 02-206308, the case filed by Sare. However, accused-
appellant was found guilty beyond reasonable doubt in Criminal Case Nos. 02-206293 and
02-206297, both filed by Dela Caza, for syndicated illegal recruitment and estafa,
respectively.
Thus, the present appeal concerns solely accused-appellant’s conviction for syndicated illegal
recruitment in Criminal Case No. 02-206293 and for estafa in Criminal Case No. 02-206297.
In Criminal Case No. 02-206293, the information charges the accused-appellant, together
with the others, as follows:
The undersigned accuses MARDEOLYN MARTIR, ISMAEL GALANZA, NELMAR MARTIR,
MARCELINO MARTIR, NORMAN MARTIR, NELSON MARTIR, MA. CECILIA M. RAMOS, LULU
MENDANES, FIDES PACARDO y JUNGCO, RODOLFO GALLO y GADOT, PILAR MANTA y DUNGO,
ELEONOR PANUNCIO and YEO SIN UNG of a violation of Section 6(a), (l) and (m) of Republic
Act 8042, otherwise known as the Migrant Workers and Overseas Filipino Workers Act of 1995,
committed by a syndicate and in large scale, as follows:
That in or about and during the period comprised between November 2000 and December,
2001, inclusive, in the City of Manila, Philippines, the said accused conspiring and
confederating together and helping with one another, representing themselves to have the
capacity to contract, enlist and transport Filipino workers for employment abroad, did then
and there willfully and unlawfully, for a fee, recruit and promise employment/job placement
abroad to FERDINAND ASISTIN, ENTICE BRENDO, REYMOND G. CENA, EDGARDO V. DELA
CAZA, RAYMUND EDAYA, SANDY O. GUANTENO, RENATO V. HUFALAR, ELENA JUBICO, LUPO
A. MANALO, ALMA V. MENOR, ROGELIO S. MORON, FEDILA G. NAIPA, OSCAR RAMIREZ,
MARISOL L. SABALDAN, DANILO SARE, MARY BETH SARDON, JOHNNY SOLATORIO and JOEL
TINIO in Korea as factory workers and charge or accept directly or indirectly from said
FERDINAND ASISTIN the amount of P45,000.00; ENTICE BRENDO – P35,000.00; REYMOND
G. CENA – P30,000.00; EDGARDO V. DELA CAZA – P45,000.00; RAYMUND EDAYA –
P100,000.00; SANDY O. GUANTENO – P35,000.00; RENATO V. HUFALAR – P70,000.00;
ELENA JUBICO – P30,000.00; LUPO A. MANALO – P75,000.00; ALMA V. MENOR – P45,000.00;
ROGELIO S. MORON – P70,000.00; FEDILA G. NAIPA – P45,000.00; OSCAR RAMIREZ –
P45,000.00; MARISOL L. SABALDAN – P75,000.00; DANILO SARE – P100,000.00; MARY BETH
SARDON – P25,000.00; JOHNNY SOLATORIO – P35,000.00; and JOEL TINIO – P120,000.00
as placement fees in connection with their overseas employment, which amounts are in excess
of or greater than those specified in the schedule of allowable fees prescribed by the POEA
Board Resolution No. 02, Series 1998, and without valid reasons and without the fault of the
said complainants failed to actually deploy them and failed to reimburse the expenses incurred
by the said complainants in connection with their documentation and processing for purposes
of their deployment.3 (Emphasis supplied)
In Criminal Case No. 02-206297, the information reads:
That on or about May 28, 2001, in the City of Manila, Philippines, the said accused conspiring
and confederating together and helping with [sic] one another, did then and there willfully,
unlawfully and feloniously defraud EDGARDO V. DELA CAZA, in the following manner, to wit:
the said accused by means of false manifestations and fraudulent representations which they
made to the latter, prior to and even simultaneous with the commission of the fraud, to the
effect that they had the power and capacity to recruit and employ said EDGARDO V. DELA
CAZA in Korea as factory worker and could facilitate the processing of the pertinent papers if
given the necessary amount to meet the requirements thereof; induced and succeeded in
inducing said EDGARDO V. DELA CAZA to give and deliver, as in fact, he gave and delivered
to said accused the amount of P45,000.00 on the strength of said manifestations and
representations, said accused well knowing that the same were false and untrue and were
made [solely] for the purpose of obtaining, as in fact they did obtain the said amount of
260
P45,000.00 which amount once in their possession, with intent to defraud said [EDGARDO]
V. DELA CAZA, they willfully, unlawfully and feloniously misappropriated, misapplied and
converted the said amount of P45,000.00 to their own personal use and benefit, to the
damage and prejudice of the said EDGARDO V. DELA CAZA in the aforesaid amount of
P45,000.00, Philippine currency.
CONTRARY TO LAW.4
When arraigned on January 19, 2004, accused-appellant Gallo entered a plea of not guilty to
all charges.
On March 3, 2004, the pre-trial was terminated and trial ensued, thereafter.
During the trial, the prosecution presented as their witnesses, Armando Albines Roa, the
Philippine Overseas Employment Administration (POEA) representative and private
complainants Dela Caza, Guanteno and Sare. On the other hand, the defense presented as
its witnesses, accused-appellant Gallo, Pacardo and Manta.
Version of the Prosecution
On May 22, 2001, Dela Caza was introduced by Eleanor Panuncio to accused-appellant Gallo,
Pacardo, Manta, Mardeolyn, Lulu Mendanes, Yeo Sin Ung and another Korean national at the
office of MPM International Recruitment and Promotion Agency ("MPM Agency") located in
Malate, Manila.
Dela Caza was told that Mardeolyn was the President of MPM Agency, while Nelmar Martir
was one of the incorporators. Also, that Marcelino Martir, Norman Martir, Nelson Martir and
Ma. Cecilia Ramos were its board members. Lulu Mendanes acted as the cashier and
accountant, while Pacardo acted as the agency’s employee who was in charge of the records
of the applicants. Manta, on the other hand, was also an employee who was tasked to deliver
documents to the Korean embassy.
Accused-appellant Gallo then introduced himself as a relative of Mardeolyn and informed Dela
Caza that the agency was able to send many workers abroad. Together with Pacardo and
Manta, he also told Dela Caza about the placement fee of One Hundred Fifty Thousand Pesos
(PhP 150,000) with a down payment of Forty-Five Thousand Pesos (PhP 45,000) and the
balance to be paid through salary deduction.
Dela Caza, together with the other applicants, were briefed by Mardeolyn about the processing
of their application papers for job placement in Korea as a factory worker and their possible
salary. Accused Yeo Sin Ung also gave a briefing about the business and what to expect from
the company and the salary.
With accused-appellant’s assurance that many workers have been sent abroad, as well as the
presence of the two (2) Korean nationals and upon being shown the visas procured for the
deployed workers, Dela Caza was convinced to part with his money. Thus, on May 29, 2001,
he paid Forty-Five Thousand Pesos (PhP 45,000) to MPM Agency through accused-appellant
Gallo who, while in the presence of Pacardo, Manta and Mardeolyn, issued and signed Official
Receipt No. 401.
Two (2) weeks after paying MPM Agency, Dela Caza went back to the agency’s office in Malate,
Manila only to discover that the office had moved to a new location at Batangas Street, Brgy.
San Isidro, Makati. He proceeded to the new address and found out that the agency was
renamed to New Filipino Manpower Development & Services, Inc. ("New Filipino"). At the new
office, he talked to Pacardo, Manta, Mardeolyn, Lulu Mendanes and accused-appellant Gallo.
He was informed that the transfer was done for easy accessibility to clients and for the purpose
of changing the name of the agency.
Dela Caza decided to withdraw his application and recover the amount he paid but Mardeolyn,
Pacardo, Manta and Lulu Mendanes talked him out from pursuing his decision. On the other
hand, accused-appellant Gallo even denied any knowledge about the money.
After two (2) more months of waiting in vain to be deployed, Dela Caza and the other
applicants decided to take action. The first attempt was unsuccessful because the agency
again moved to another place. However, with the help of the Office of Ambassador Señeres
and the Western Police District, they were able to locate the new address at 500 Prudential
Building, Carriedo, Manila. The agency explained that it had to move in order to separate
those who are applying as entertainers from those applying as factory workers. Accused-
appellant Gallo, together with Pacardo and Manta, were then arrested.
The testimony of prosecution witness Armando Albines Roa, a POEA employee, was dispensed
with after the prosecution and defense stipulated and admitted to the existence of the
following documents:
1. Certification issued by Felicitas Q. Bay, Director II, Licensing Branch of the POEA to the
effect that "New Filipino Manpower Development & Services, Inc., with office address at 1256
Batangas St., Brgy. San Isidro, Makati City, was a licensed landbased agency whose license
expired on December 10, 2001 and was delisted from the roster of licensed agencies on
December 14, 2001." It further certified that "Fides J. Pacardo was the agency’s Recruitment
Officer";
2. Certification issued by Felicitas Q. Bay of the POEA to the effect that MPM International
Recruitment and Promotion is not licensed by the POEA to recruit workers for overseas
employment;
3. Certified copy of POEA Memorandum Circular No. 14, Series of 1999 regarding placement
fee ceiling for landbased workers.
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4. Certified copy of POEA Memorandum Circular No. 09, Series of 1998 on the placement fee
ceiling for Taiwan and Korean markets, and
5. Certified copy of POEA Governing Board Resolution No. 02, series of 1998.
Version of the Defense
For his defense, accused-appellant denied having any part in the recruitment of Dela Caza.
In fact, he testified that he also applied with MPM Agency for deployment to Korea as a factory
worker. According to him, he gave his application directly with Mardeolyn because she was
his town mate and he was allowed to pay only Ten Thousand Pesos (PhP 10,000) as processing
fee. Further, in order to facilitate the processing of his papers, he agreed to perform some
tasks for the agency, such as taking photographs of the visa and passport of applicants,
running errands and performing such other tasks assigned to him, without salary except for
some allowance. He said that he only saw Dela Caza one or twice at the agency’s office when
he applied for work abroad. Lastly, that he was also promised deployment abroad but it never
materialized.
Ruling of the Trial Court
On March 15, 2007, the RTC rendered its Decision convicting the accused of syndicated illegal
recruitment and estafa. The dispositive portion reads:
WHEREFORE, judgment is hereby rendered as follows:
I. Accused FIDES PACARDO y JUNGO and PILAR MANTA y DUNGO are hereby ACQUITTED of
the crimes charged in Criminal Cases Nos. 02-206293, 02-206297, 02-206300 and 02-
206308;
II. Accused RODOLFO GALLO y GADOT is found guilty beyond reasonable doubt in Criminal
Case No. 02-206293 of the crime of Illegal Recruitment committed by a syndicate and is
hereby sentenced to suffer the penalty of life imprisonment and to pay a fine of ONE MILLION
(Php1,000,000.00) PESOS. He is also ordered to indemnify EDGARDO DELA CAZA of the sum
of FORTY-FIVE THOUSAND (Php45,000.00) PESOS with legal interest from the filing of the
information on September 18, 2002 until fully paid.
III. Accused RODOLFO GALLO y GADOT in Criminal Case No. 02-206297 is likewise found
guilty and is hereby sentenced to suffer the indeterminate penalty of FOUR (4) years of prision
correccional as minimum to NINE (9) years of prision mayor as maximum.
IV. Accused RODOLFO GALLO y GADOT is hereby ACQUITTED of the crime charged in Criminal
Cases Nos. 02-206300 and 02-206308.
Let alias warrants for the arrest of the other accused be issued anew in all the criminal cases.
Pending their arrest, the cases are sent to the archives.
The immediate release of accused Fides Pacardo and Pilar Manta is hereby ordered unless
detained for other lawful cause or charge.
SO ORDERED.5
Ruling of the Appellate Court
On appeal, the CA, in its Decision dated December 24, 2008, disposed of the case as follows:
WHEREFORE, the appealed Decision of the Regional Trial Court of Manila, Branch 30, in
Criminal Cases Nos. 02-206293 and 02-206297, dated March 15, 2007, is AFFIRMED with the
MODIFICATION that in Criminal Case No. 02-206297, for estafa, appellant is sentenced to
four (4) years of prision correccional to ten (10) years of prision mayor.
SO ORDERED.6
The CA held the totality of the prosecution’s evidence showed that the accused-appellant,
together with others, engaged in the recruitment of Dela Caza. His actions and
representations to Dela Caza can hardly be construed as the actions of a mere errand boy.
As determined by the appellate court, the offense is considered economic sabotage having
been committed by more than three (3) persons, namely, accused-appellant Gallo,
Mardeolyn, Eleonor Panuncio and Yeo Sin Ung. More importantly, a personal found guilty of
illegal recruitment may also be convicted of estafa. 7 The same evidence proving accused-
appellant’s commission of the crime of illegal recruitment in large scale also establishes his
liability for estafa under paragragh 2(a) of Article 315 of the Revised Penal Code (RPC).
On January 15, 2009, the accused-appellant filed a timely appeal before this Court.
The Issues
Accused-appellant interposes in the present appeal the following assignment of errors:
I
The court a quo gravely erred in finding the accused-appellant guilty of illegal recruitment
committed by a syndicate despite the failure of the prosecution to prove the same beyond
reasonable doubt.
II
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The court a quo gravely erred in finding the accused-appellant guilty of estafa despite the
failure of the prosecution to prove the same beyond reasonable doubt.
Our Ruling
The appeal has no merit.
Evidence supports conviction of the crime of Syndicated Illegal Recruitment
Accused-appellant avers that he cannot be held criminally liable for illegal recruitment because
he was neither an officer nor an employee of the recruitment agency. He alleges that the trial
court erred in adopting the asseveration of the private complainant that he was indeed an
employee because such was not duly supported by competent evidence. According to him,
even assuming that he was an employee, such cannot warrant his outright conviction sans
evidence that he acted in conspiracy with the officers of the agency.
We disagree.
To commit syndicated illegal recruitment, three elements must be established: (1) the
offender undertakes either any activity within the meaning of "recruitment and placement"
defined under Article 13(b), or any of the prohibited practices enumerated under Art. 34 of
the Labor Code; (2) he has no valid license or authority required by law to enable one to
lawfully engage in recruitment and placement of workers;8 and (3) the illegal recruitment is
committed by a group of three (3) or more persons conspiring or confederating with one
another.9 When illegal recruitment is committed by a syndicate or in large scale, i.e., if it is
committed against three (3) or more persons individually or as a group, it is considered an
offense involving economic sabotage.10
Under Art. 13(b) of the Labor Code, "recruitment and placement" refers to "any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and
includes referrals, contract services, promising or advertising for employment, locally or
abroad, whether for profit or not".
After a thorough review of the records, we believe that the prosecution was able to establish
the elements of the offense sufficiently. The evidence readily reveals that MPM Agency was
never licensed by the POEA to recruit workers for overseas employment.
Even with a license, however, illegal recruitment could still be committed under Section 6 of
Republic Act No. 8042 ("R.A. 8042"), otherwise known as the Migrants and Overseas Filipinos
Act of 1995, viz:
Sec. 6. Definition. – For purposes of this Act, illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and
includes referring, contract services, promising or advertising for employment abroad,
whether for profit or not, when undertaken by a non-licensee or non-holder of authority
contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise
known as the Labor Code of the Philippines: Provided, That any such non-licensee or non-
holder who, in any manner, offers or promises for a fee employment abroad to two or more
persons shall be deemed so engaged. It shall, likewise, include the following act, whether
committed by any person, whether a non-licensee, non-holder, licensee or holder of authority:
(a) To charge or accept directly or indirectly any amount greater than that specified in the
schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make
a worker pay any amount greater than that actually received by him as a loan or advance;
xxxx
(l) Failure to actually deploy without valid reason as determined by the Department of Labor
and Employment; and
(m) Failure to reimburse expenses incurred by the worker in connection with his
documentation and processing for purposes of deployment and processing for purposes of
deployment, in cases where the deployment does not actually take place without the worker’s
fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered
an offense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3)
or more persons conspiring or confederating with one another. It is deemed committed in
large scale if committed against three (3) or more persons individually or as a group.
The persons criminally liable for the above offenses are the principals, accomplices and
accessories. In case of juridical persons, the officers having control, management or direction
of their business shall be liable.
In the instant case, accused-appellant committed the acts enumerated in Sec. 6 of R.A. 8042.
Testimonial evidence presented by the prosecution clearly shows that, in consideration of a
promise of foreign employment, accused-appellant received the amount of Php 45,000.00
from Dela Caza. When accused-appellant made misrepresentations concerning the agency’s
purported power and authority to recruit for overseas employment, and in the process,
collected money in the guise of placement fees, the former clearly committed acts constitutive
of illegal recruitment.11 Such acts were accurately described in the testimony of prosecution
witness, Dela Caza, to wit:
PROS. MAGABLIN
Q: How about this Rodolfo Gallo?
263
A: He was the one who received my money. A: For placement fee.

Q: Aside from receiving your money, was there any other representations or acts made by Q: Now did you believe to (sic) them?
Rodolfo Gallo?
A: Yes, ma’am.
A: He introduced himself to me as relative of Mardeolyn Martir and he even intimated to me
that their agency has sent so many workers abroad. Q: Why, why did you believe?

xxxx A: Because of the presence of the two Korean nationals and they keep on telling me that they
have sent abroad several workers and they even showed visas of the records that they have
PROS. MAGABLIN already deployed abroad.

Q: Mr. Witness, as you claimed you tried to withdraw your application at the agency. Was Q: Aside from that, was there any other representations which have been made upon you or
there any instance that you were able to talk to Fides Pacardo, Rodolfo Gallo and Pilar Manta? make you believe that they can deploy you?

A: Yes, ma’am.
Q: What was the conversation that transpired among you before you demanded the return of
your money and documents?
A: When I tried to withdraw my application as well as my money, Mr. Gallo told me "I know
nothing about your money" while Pilar Manta and Fides Pacardo told me, why should I
withdraw my application and my money when I was about to be [deployed] or I was about to
leave.
A: At first I was adamant but they told me "If you do not want to believe us, then we could
do nothing." But once they showed me the [visas] of the people whom they have deployed
abroad, that was the time I believe them.
Q: So after believing on the representations, what did you do next Mr. Witness?
A: That was the time that I decided to give the money.
xxxx

xxxx PROS. MAGABLIN

Q: And what transpired at that office after this Panuncio introduced you to those persons Q: Do you have proof that you gave the money?
whom you just mentioned?
A: Yes, ma’am.
A: The three of them including Rodolfo Gallo told me that the placement fee in that agency is
Php 150,000.00 and then I should deposit the amount of Php 45,000.00. After I have Q: Where is your proof that you gave the money?
deposited said amount, I would just wait for few days…
A: I have it here.
xxxx
PROS. MAGABLIN:
Q: They were the one (sic) who told you that you have to pay Php 45,000.00 for deposit only?
Witness is producing to this court a Receipt dated May 28, 2001 in the amount of
A: Yes, ma’am, I was told by them to deposit Php 45,000.00 and then I would pay the Php45,000.00 which for purposes of record Your Honor, may I request that the same be
remaining balance of Php105,000.00, payment of it would be through salary deduction. marked in the evidence as our Exhibit "F".

Q: That is for what Mr. Witness again? xxxx

264
PROS. MAGABLIN Essentially, Dela Caza appeared very firm and consistent in positively identifying accused-
appellant as one of those who induced him and the other applicants to part with their money.
Q: There appears a signature appearing at the left bottom portion of this receipt. Do you His testimony showed that accused-appellant made false misrepresentations and promises in
know whose signature is this? assuring them that after they paid the placement fee, jobs in Korea as factory workers were
waiting for them and that they would be deployed soon. In fact, Dela Caza personally talked
A: Yes, ma’am, signature of Rodolfo Gallo. to accused-appellant and gave him the money and saw him sign and issue an official receipt
as proof of his payment. Without a doubt, accused-appellants’ actions constituted illegal
recruitment.
PROS. MAGABLIN

Additionally, accused-appellant cannot argue that the trial court erred in finding that he was
Q: Why do you say that that is his signature?
indeed an employee of the recruitment agency. On the contrary, his active participation in
the illegal recruitment is unmistakable. The fact that he was the one who issued and signed
A: Rodolfo Gallo’s signature Your Honor because he was the one who received the money and the official receipt belies his profession of innocence.
he was the one who filled up this O.R. and while he was doing it, he was flanked by Fides
Pacardo, Pilar Manta and Mardeolyn Martir.
This Court likewise finds the existence of a conspiracy between the accused-appellant and the
other persons in the agency who are currently at large, resulting in the commission of the
xxxx crime of syndicated illegal recruitment.

Q: So it was Gallo who received your money?
A: Yes, ma’am.
PROS. MAGABLIN
Q: And after that, what did this Gallo do after he received your money?
A: They told me ma’am just to call up and make a follow up with our agency.
xxxx
Q: Now Mr. Witness, after you gave your money to the accused, what happened with the
application, with the promise of employment that he promised?
In this case, it cannot be denied that the accused-appellent together with Mardeolyn and the
rest of the officers and employees of MPM Agency participated in a network of deception.
Verily, the active involvement of each in the recruitment scam was directed at one single
purpose – to divest complainants with their money on the pretext of guaranteed employment
abroad. The prosecution evidence shows that complainants were briefed by Mardeolyn about
the processing of their papers for a possible job opportunity in Korea, as well as their possible
salary. Likewise, Yeo Sin Ung, a Korean national, gave a briefing about the business and what
to expect from the company. Then, here comes accused-appellant who introduced himself as
Mardeolyn’s relative and specifically told Dela Caza of the fact that the agency was able to
send many workers abroad. Dela Caza was even showed several workers visas who were
already allegedly deployed abroad. Later on, accused-appellant signed and issued an official
receipt acknowledging the down payment of Dela Caza. Without a doubt, the nature and
extent of the actions of accused-appellant, as well as with the other persons in MPM Agency
clearly show unity of action towards a common undertaking. Hence, conspiracy is evidently
present.

A: Two (2) weeks after giving them the money, they moved to a new office in Makati, Brgy.
In People v. Gamboa,13 this Court discussed the nature of conspiracy in the context of illegal
San Isidro.
recruitment, viz:

xxxx
Q: And were they able to deploy you as promised by them?
A: No, ma’am, they were not able to send us abroad.12
Conspiracy to defraud aspiring overseas contract workers was evident from the acts of the
malefactors whose conduct before, during and after the commission of the crime clearly
indicated that they were one in purpose and united in its execution. Direct proof of previous
agreement to commit a crime is not necessary as it may be deduced from the mode and
manner in which the offense was perpetrated or inferred from the acts of the accused pointing
to a joint purpose and design, concerted action and community of interest. As such, all the

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accused, including accused-appellant, are equally guilty of the crime of illegal recruitment
since in a conspiracy the act of one is the act of all.
To reiterate, in establishing conspiracy, it is not essential that there be actual proof that all
the conspirators took a direct part in every act. It is sufficient that they acted in concert
pursuant to the same objective.14
Estafa
The prosecution likewise established that accused-appellant is guilty of the crime of estafa as
defined under Article 315 paragraph 2(a) of the Revised Penal Code, viz:
Art. 315. Swindling (estafa). – Any person who shall defraud another by any means mentioned
hereinbelow…
xxxx
2. By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the fraud:
(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications,
property, credit, agency, business or imaginary transactions; or by means of other similar
deceits.
The elements of estafa in general are: (1) that the accused defrauded another (a) by abuse
of confidence, or (b) by means of deceit; and (2) that damage or prejudice capable of
pecuniary estimation is caused to the offended party or third person. 15 Deceit is the false
representation of a matter of fact, whether by words or conduct, by false or misleading
allegations, or by concealment of that which should have been disclosed; and which deceives
or is intended to deceive another so that he shall act upon it, to his legal injury.
All these elements are present in the instant case: the accused-appellant, together with the
other accused at large, deceived the complainants into believing that the agency had the
power and capability to send them abroad for employment; that there were available jobs for
them in Korea as factory workers; that by reason or on the strength of such assurance, the
complainants parted with their money in payment of the placement fees; that after receiving
the money, accused-appellant and his co-accused went into hiding by changing their office
locations without informing complainants; and that complainants were never deployed
abroad. As all these representations of the accused-appellant proved false, paragraph 2(a),
Article 315 of the Revised Penal Code is thus applicable.1avvphi1
Defense of Denial Cannot Prevail over Positive Identification
Indubitably, accused-appellant’s denial of the crimes charged crumbles in the face of the
positive identification made by Dela Caza and his co-complainants as one of the perpetrators
of the crimes charged. As enunciated by this Court in People v. Abolidor, 16 "[p]ositive
identification where categorical and consistent and not attended by any showing of ill motive
on the part of the eyewitnesses on the matter prevails over alibi and denial."
The defense has miserably failed to show any evidence of ill motive on the part of the
prosecution witnesses as to falsely testify against him.
Therefore, between the categorical statements of the prosecution witnesses, on the one hand,
and bare denials of the accused, on the other hand, the former must prevail. 17
Moreover, this Court accords the trial court’s findings with the probative weight it deserves in
the absence of any compelling reason to discredit the same. It is a fundamental judicial dictum
that the findings of fact of the trial court are not disturbed on appeal except when it
overlooked, misunderstood or misapplied some facts or circumstances of weight and
substance that would have materially affected the outcome of the case. We find that the trial
court did not err in convicting the accused-appellant.
WHEREFORE, the appeal is DENIED for failure to sufficiently show reversible error in the
assailed decision. The Decision dated December 24, 2008 of the CA in CA-G.R. CR-H.C. No.
02764 is AFFIRMED.
No costs.
SO ORDERED.
G.R. No. 199211 June 4, 2014
PEOPLE OF THE PHILIPPINES, Appellee,
vs.
JERIC FERNANDEZ y JAURIGUE, Appellant.
RESOLUTION
BRION, J.:
We decide the appeal, filed by appellant Jeric Fernandez, assailing the April 6, 2011 decision
of the Court of Appeals (CA) in CA-G.R. CR-HC No. 03313.1
The RTC Ruling
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In its February 11, 2008 decision,2 the Regional Trial Court (RTC), Branch 211, Mandaluyong
City, convicted the appellant of the crimes of illegal recruitment in large scale and five ( 5)
counts of estafa committed against complainants Airene Etac, Jowel A. Baja, Joemar Aquino,
Luis M. Bernardo and Anthony M. Canlas. The RTC gave full faith and credence to the
testimonies of the complainants that the appellant promised them employment abroad. The
trial court ruled that the appellant represented to the complainants that he had the power
and ability to send them in Hongkong, and that by virtue of this representation and fraud, the
complainants were convinced to part with their money in order to be employed. It also
disregarded the appellant’s defenses of denial and alibi.
For the crime of illegal recruitment in large scale in Criminal Case No. MC03-6278, the RTC
sentenced the appellant to suffer the penalty of life imprisonment, and to pay a ₱100,000.00
fine. For the crime of estafa, the RTC sentenced the appellant to suffer the following
indeterminate penalties: (a) four (4) years of prision correccional, as minimum, to nine (9)
years of prision mayor, as maximum in Criminal Case No. MC03-6279; (b) four (4) years of
prision correccional, as minimum, to seven (7) years of prision mayor, as maximum in
Criminal Case No. MC03-6280; (c) four (4) years of prision correccional, as minimum, to
seven (7) years of prision mayor, as maximum in Criminal Case No. MC03-6281; (d) four (4)
years of prision correccional, as minimum, to eight (8) years of prision mayor, as maximum
in Criminal Case No. MC03-6282 ; and (e) four (4) years of prision correccional, as minimum,
to eight (8) years of prision mayor, as maximum in Criminal Case No. MC03-6283.
The RTC also ordered the appellant to indemnify Etac the sum of ₱35,000.00; Baja the sum
of ₱29,550.00; Aquino the sum of ₱45,800.00; Bernardo the sum of ₱30,500.00; and Canlas
the sum of ₱29,550.00.
The CA Ruling
On appeal, the CA upheld the factual findings of the RTC. It agreed with the trial court that
all the elements of illegal recruitment, as defined under Article 13(b), in relation to Article 34
of the of the Labor Code, were sufficiently established by the prosecution’s evidence. The CA
held that the appellant’s acts of promising the complainants that they would be deployed for
work abroad after they paid him their placement fees, and his misrepresentations concerning
his purported power and authority despite the lack of license, are constitutive of illegal
recruitment in large scale.
The CA also declared that appellant’s assurances that he could deploy the complainants for
employment in Hongkong constitutes estafa.
Our Ruling
We deny the appeal and affirm the appellant’s convictions. We however, modify the penalties
imposed in the five counts of estafa.
Illegal Recruitment In Large Scale
Article 38 of the Labor Code defines illegal recruitment as "any recruitment activities, including
the prohibited practices enumerated under Article 34 of (the Labor Code), to be undertaken
by non-licensees or non holders of authority." The term "recruitment and placement" refers
to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring
workers, including referrals, contract services, promising or advertising for employment,
locally or abroad, whether for profit or not, provided that any person or entity which, in any
manner, offers or promises for a fee employment to two or more persons shall be deemed
engaged in recruitment and placement. The law imposes a higher penalty when the illegal
recruitment is committed by a syndicate or in large scale as they are considered an offense
involving economic sabotage. Illegal recruitment is deemed committed by a syndicate if
carried out by a group of three (3) or more persons conspiring and/or confederating with one
another in carrying out any unlawful or illegal transaction, enterprise or scheme. It is deemed
committed in large scale if committed against three (3) or more persons individually or as a
group.3
For illegal recruitment in large scale to prosper, the prosecution has to prove three essential
elements, namely: (1) the accused undertook a recruitment activity under Article 13(b) or
any prohibited practice under Article 34 of the Labor Code; (2) the accused did not have the
license or the authority to lawfully engage in the recruitment and placement of workers; and
(3) the accused committed such illegal activity against three or more persons individually or
as a group. In the present case, the appellant promised the five complainants that there were
jobs available for them in Hongkong; and that through his help, they could be deployed for
work within a month or two. He exacted money from them for the plane ticket, hotel
accommodation, processing of visa and placement fees. Notably, the prosecution presented
a Certification dated January 10, 2003 issued by Felicitas Q. Bay, Director II of the Philippine
Overseas Employment Agency (POEA) Licensing Branch, showing that the appellant had no
authority or license to lawfully engage in the recruitment and placement of workers. These
acts, to our mind, constitute illegal recruitment. There is illegal recruitment when one who
does not possess the necessary authority or license gives the impression of having the ability
to send a worker abroad. Corollarily, where the offense is committed against three or more
persons, as in this case, it is qualified to illegal recruitment in large scale which provides a
higher penalty under Article 39(a) of the Labor Code.
Estafa
We point out that conviction under the Labor Code for illegal recruitment does not preclude
punishment under the Revised Penal Code for the crime of estafa.4 We are convinced that
the prosecution proved beyond reasonable doubt that appellant violated Article 315(2)(a) of
the Revised Penal Code, as amended, which provides that estafa is committed by any person
who defrauds another by using a fictitious name; or by falsely pretending to possess power,
influence, qualifications, property, credit, agency, business; by imaginary transactions or
similar forms of deceit executed prior to or simultaneous with the fraud.5
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The appellant’s act of falsely pretending to possess power and qualifications to deploy the
complainants to Hongkong, even if he did not have the authority or license for the purpose,
undoubtedly constitutes estafa under Article 315(2)(a) of the Revised Penal Code. The
elements of deceit and damage are clearly present; the appellant’s false pretenses were the
very cause that induced the complainants to part with their money.
Penalties
The CA correctly imposed the penalty for illegal recruitment in large scale.
As regards the penalties imposed in the crime of estafa, Article 315 of the RPC provides that
an accused found guilty of estafa shall be sentenced to the penalty of prision correccional in
its maximum period to prision mayor in its minimum period, if the amount of the fraud is over
12,000 but does not exceed 22,000 pesos, and if such amount exceeds the latter sum, the
penalty provided in this paragraph shall be imposed in its maximum period, adding one year
for each additional 10,000 pesos.
Applying the Indeterminate Sentence Law, the minimum term is taken from the penalty next
lower or anywhere within prision correccional minimum and medium (i.e., from 6 months and
1 day to 4 years and 2 months). On the other hand, the maximum term is taken from the
prescribed penalty of prision correccional maximum to prision mayor minimum in its
maximum period, adding 1 year of imprisonment for every ₱10,000.00 in excess of
₱22,000.00, provided that the total penalty shall not exceed 20 years.
Applying these principles to the present case, the maximum period of the prescribed penalty
of prision correccional maximum to prision mayor minimum is not prision mayor minimum as
apparently assumed by the RTC.1âwphi1 To compute the maximum period of the prescribed
penalty, prision correccional maximum to prision mayor minimum should be divided into three
equal portions of time each of which portion shall be deemed to form one period in accordance
with Article65 of the RPC. Following this procedure, the maximum period of prision
correccional maximum to prision mayor minimum is from 6 years, 8 months and 21 days to
8 years. The incremental penalty, when proper, shall thus be added to anywhere from 6 years,
8 months and 21 days to 8 years, at the discretion of the court.
In computing the incremental penalty, jurisprudence tells us that the amount defrauded
should be subtracted by ₱22,000.00, and the difference shall be divided by ₱10,000.00. Any
fraction of a year shall be discarded. Accordingly, the imposable penalty should be as follows:
In Criminal Case No. MC03-6279, where the amount defrauded was ₱45,800.00, the appellant
should be sentenced to an indeterminate penalty of four (4) years and two (2) months of
prision correccional, as minimum, to 8 years, 8 months and 21 days of prision mayor, as
maximum. Since the amount defrauded exceeds ₱22,000.00 by ₱23,800.00, 2 years shall be
added to the maximum period of the prescribed penalty.
In Criminal Case No. MC03-6280, where the amount defrauded was ₱29,550.00, the appellant
should be sentenced to an indeterminate penalty of four (4) years and two (2) months of
prision correccional, as minimum, to 6 years, 8 months and 21 days of prision mayor, as
maximum.
In Criminal Case No. MC03-6281, where the amount defrauded was ₱29,550.00, the appellant
should be sentenced to an indeterminate penalty of four (4) years and two (2) months of
prision correccional, as minimum, to 6 years, 8 months and 21 days of prision mayor, as
maximum.
In Criminal Case No. MC03-6282, where the amount defrauded was ₱30,500.00, the appellant
should be sentenced to an indeterminate penalty of four (4) years and two (2) months of
prision correccional, as minimum, to 6 years, 8 months and 21 days of prision mayor, as
maximum.
In Criminal Case No. MC03-6283, where the amount defrauded was ₱35,000.00, the appellant
should be sentenced to an indeterminate penalty of four (4) years and two (2) months of
prision correccional, as minimum, to 7 years, 8 months and 21 days or prision mayor, as
maximum. Since the amount defrauded exceeds ₱22,000.00 by ₱13,000.00, 1 year shall be
added to the maximum period of the prescribed penalty.
WHEREFORE, premises considered, the assailed decision of the Court of Appeals dated April
6, 2011 in CA-G.R. CR-HC No. 03313 is hereby AFFIRMED with the following MODIFICATIONS:
(1) In Criminal Case No. MC03-6279, the appellant is sentenced to suffer the indeterminate
penalty of four ( 4) years and two (2) months of prision correccional, as minimum, to 8 years,
8 months and 21 days of prision mayor, as maximum.
(2) In Criminal Case No. MC03-6280, the appellant is sentenced to suffer the indeterminate
penalty of four (4) years and two (2) months of prision correccional, as minimum, to 6 years,
8 months and 21 days of prision mayor, as maximum.
(3) In Criminal Case No. MC03-6281, the appellant is sentenced to suffer the indeterminate
penalty of four (4) years and two (2) months of prision correccional, as minimum, to 6 years,
8 months and 21 days of prision mayor, as maximum.
(4) In Criminal Case No. MC03-6282, the appellant is sentenced to suffer the in detenninate
penalty of four (4) years and two (2) months of prision correccional, as minimum, to 6 years,
8 months and 21 days of prision mayor, as maximum.
(5) In Criminal Case No. MC03-6283, the appellant is sentenced to suffer the indeterminate
penalty of four (4) years and two (2) months of prision correccional, as minimum, to 7 years,
8 months and 21 days or prision mayor, as maximum.
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SO ORDERED.

269